Dollar drops on weak inflation, gold surges

US inflation data triggers a dollar pullback, boosting gold and other majors, as traders await key central bank events.

Dollar and gold react to CPI

• The dollar experienced a significant drop today following weaker US consumer inflation data for June. This marked the weakest US inflation figure in six years, leading to an easing of Federal Reserve interest rate hike bets, according to Investing.
• On an intraday basis our currency-strength gauge ranks the dollar as the strongest major, and our MRS stands at 66 — a market primed for movement. Even so, the day's dominant narrative has the dollar under pressure after the weak US CPI, making that intraday bid a session-specific rebound against the broader move.
• Gold surged, rising to nearly $4,050, directly benefiting from the weakening US inflation outlook, as reported by FXStreet.
• The euro gained ground and the pound sterling also saw a boost for several hours as the weaker US inflation weighed on the dollar.
• The USD/CHF pair fell below 0.8100, though FXStreet analysts maintain a bullish outlook for the pair.

Asia and Pacific currencies

• New Zealand's retail sales data for June 2026 came in at +1.3% year-on-year, down from the previous +3.3%. The New Zealand dollar is ranked as the weakest currency today.
• The Chinese yuan sees ongoing range consolidation against the dollar, according to UOB, with its trade surplus providing some protection, per Commerzbank. Rabobank notes that Europe is questioning the yuan's undervaluation and the trade gap. Standard Chartered anticipates reactivated fiscal support for China.
• In Japan, the Reuters Tankan report indicated mixed business sentiment, with Middle East risks persisting.

Key events today

• USD · Core PPI m/m: SCHEDULED — forecast 0.3% (previous 0.4%)
• USD · PPI m/m: SCHEDULED — forecast 0.0% (previous 1.1%)
• CAD · Overnight Rate: SCHEDULED — forecast 2.25% (previous 2.25%)
• CAD · BOC Monetary Policy Report, Rate Statement, and Press Conference are all scheduled later today.
• USD · Fed Chairman Warsh is scheduled to testify.

On our gauges, the FSI is neutral at 56 while the CTS stays high at 81.