Dollar dips as US inflation cools; gold steadies below $4,400

The dollar came under pressure today after softer US inflation data reduced Fed hike bets, reversing yesterday's recovery; gold steadied below the $4,400 ceiling it had just cleared, and the pound was the weakest major.

Dollar under pressure, euro advances

• The dollar fell as cooling US inflation data, including weaker US PPI figures, led traders to reduce expectations for Federal Reserve rate hikes in September — reversing yesterday's recovery, when an in-line CPI print and Hormuz risk had put a floor under it. Fed's Goolsbee noted that inflation is expected to improve as shocks dissipate.
• The euro gained strength, trading above 1.1500 against the dollar. This move was supported by the deceleration in US inflation data, which eased pressure on the US dollar.
• Fitch affirmed the US credit rating at AA+, maintaining a stable outlook amidst slowing growth.

Gold and commodities

• Gold drifted higher above $4,350 as weaker US PPI data further reduced Fed tightening bets — but it is steadying below the $4,400 ceiling it cleared yesterday, having slipped back through that level during the session as the dollar briefly recovered. This is a pullback finding support, not an extension of yesterday's break.
• WTI crude oil remained below $80.50. Traders are monitoring diplomatic efforts aimed at reopening the Strait of Hormuz, with Iran reportedly stating the strait is under its control and management. US Treasury Secretary Bessent indicated that "unprecedented measures" would be implemented against Iran.

Pound weakness, antipodeans strong

• The British pound was the weakest major currency today. It edged higher against a softer dollar but lagged the rest of the field, held back by the recent GDP slowdown and weak industrial production, with geopolitics capping the follow-through. The Q2 growth beat, as reported by Investing.com, rested on a ceasefire that has since collapsed. GBP/JPY stabilized above 215.00.
• The Australian dollar ranked as the strongest major on our gauge, holding close to 0.7060 with attention on the RBA's Bullock, though it turned lower late in the session despite an RBA rate-hike warning.
• New Zealand's manufacturing growth cooled to 54.3 in July, yet the New Zealand dollar held away from two-week lows after a moderate RBNZ survey.
• On a broader market level, our FSI indicates Greed at 69, with the CTS high at 80 and MRS at 59.

Key events today

• USD · Core Retail Sales m/m: SCHEDULED · forecast 0.2%, previous -0.2%
• USD · Retail Sales m/m: SCHEDULED · forecast 0.1%, previous 0.2%
• USD · Prelim UoM Consumer Sentiment: SCHEDULED · forecast 54.7, previous 54.4
• USD · Prelim UoM Inflation Expectations: SCHEDULED · previous 4.2%