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The GBP/USD pair gains ground to near 1.3405 during the early Asian session on Wednesday. The US dollar weakens against the British Pound as softer-than-expected US inflation in June tempered expectations for US Federal Reserve policy tightening. The release of the US June Producer Price Index report will be in the spotlight later in the day.
The EUR/USD pair gains ground to near 1.1425 during the early Asian trading hours on Wednesday. The US Dollar weakens against the Euro as softer-than-expected US inflation data temporarily eased pressure on the Federal Reserve. Traders will take more cues from the US Producer Price Index report, which is due on Wednesday.
Gold resumes the previous day's late pullback from $4,100 and falls back below $4,050 early Wednesday as escalating US-Iran tensions keep the geopolitical risk premium in play. However, reduced bets for a Fed rate hike keep the US Dollar on the back foot, which could cap the downside in the non-yielding bullion.
Ethereum jumped more than 7% above $1,850 on Tuesday following a weaker-than-expected US Consumer Price Index report for June. The inflation data fell to 3.5% below expectations of 3.8%, marking a month-on-month decline of 0.4%, its largest monthly drop since May 2020. Core CPI also fell to 2.6% below forecasts of 2.8%.
While testifying on the Semiannual Monetary Policy Report before the US House Financial Services Committee, Fed Chairman Kevin Warsh reiterated that the Fed is making a commitment on price stability and the goal of 2% inflation.
Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.
