Forex today: Gold clears the $4,400 ceiling as the dollar recovers

Gold broke through the ceiling that had capped it for three sessions after US inflation landed in line, while the dollar reversed yesterday's dip with Strait of Hormuz risk back in play.

Major market themes

• Gold cleared $4,400 — the ceiling that had capped it for three straight sessions — gaining over 1% to its highest level since early June after July CPI landed in line with forecasts. Tame inflation eased the pressure for further Fed tightening, which is what the metal had been waiting for. It edged back toward $4,400 in Asian hours as US-Iran tensions countered that support, with Iran indicating no progress on an interim peace deal, as reported by Reuters — an unusual turn for a safe-haven asset.
• The US dollar recovered earlier losses, closing higher after US CPI data matched expectations, as reported by InvestingLive. The reversal was not the data alone: renewed Strait of Hormuz uncertainty put a floor under the dollar, the same mechanism that has supported it since last week. On an intraday basis, however, our strength gauge ranks the Swiss franc as the strongest major currency today.
• WTI crude oil dropped below $82.50, reversing yesterday's advance above that level, after US inventories rose far more than expected. Through Wednesday the Hormuz risk premium had outweighed that build; overnight the inventories won. Fourteen vessels crossed the Strait on Tuesday, against roughly 120 a day before the war.
• The Mexican peso continued its ascent, reaching new two-year highs with USD/MXN at 17.05. The in-line inflation print trimmed September Fed hike odds, easing the pressure that had weighed on the currency.
• The New Zealand dollar registered as the weakest major currency for a third consecutive session, pressured by broader uncertainty stemming from the Middle East.

Sentiment and upcoming data

• Market sentiment remains in "Greed" with an FSI of 64, similar to yesterday, and the CTS is high at 80, indicating sustained carry trade interest. The MRS sits at 59.

Key events today

• NZD · Inflation Expectations q/q: SCHEDULED (previous 2.53%)
• GBP · GDP m/m: SCHEDULED (forecast 0.0%, previous 0.1%)
• USD · PPI m/m: SCHEDULED (forecast 0.2%, previous -0.3%)
• USD · Core PPI m/m: SCHEDULED (forecast 0.3%, previous 0.2%)
• USD · Unemployment Claims: SCHEDULED (forecast 202K, previous 199K)