US CPI data released yesterday showed an unexpected fall from an annualized rate of 3.0% to 2.9%, putting a moderate bid into stocks and sending the US Dollar downwards to test crucial lows.

1. US inflation data released yesterday showed annualized inflation falling from 3.0% to 2.9% over the past month, while it had been expected to remain unchanged. This is the lowest rate in three years and the fourth consecutive month of falling inflation in the USA. This was a small dovish surprise and makes a 0.50% rate cut at the Fed’s next meeting in September more likely to happen, although a 0.25% cut is expected by 65%. This sent stock markets a bit higher and sent the US lower with heavy price action. The US Dollar Index is now testing key support and looking likely to make a significant bearish breakdown.
2. In the Forex market, the Australian Dollar has been the strongest major currency since today’s Tokyo open, while the Swiss Franc has been the weakest. The EUR/USD currency pair remains in focus today after it made a bullish breakout yesterday to reach a 2024 high at $1.1050. Trend traders will be interested in being long of this currency pair.
3. Stock markets have continued to recover following the strong selloff over the early part of last week. US equity indices closed higher and are continuing to trade higher off-hours this morning, while major Asian indices are mostly inching higher.
4. US CPI data is expected to remain steady at an annualized rate of 3.0%. A lower of higher reading will likely cause directional movement in the US Dollar and in US stock markets.
5. Gold came close to trading at a record high, reaching $2,480 yesterday before selling off to close lower. However, the precious metal found a weak bid in recent hours.
6. UK CPI data released yesterday came in slightly lower than expected with an annualized rate of only 2.2% while 2.3% was expected, suggesting declining inflationary pressure.
7. Australian Unemployment data released yesterday showed an unexpected rise from 4.1% to 4.2%.
8. There will be releases later today of US Retail Sales and Unemployment Claims data.
9. It is a public holiday today in France and Italy.

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