The US dollar is showing relative strength today, maintaining a firmer stance against most of the G10 currencies. However, it is largely in consolidation mode. Among the G10, the Japanese yen and Swiss franc are leading the gains, while the Scandinavian and Antipodean currencies are underperforming. Although the news flow is light, concerns about an escalation in the Middle East conflict have further propelled the crude oil rally. Global equities present a mixed picture, with gold maintaining its firmness, trading near $2,525 in the European morning session.

Asia-Pacific Markets
In the Asia-Pacific region, attention turns to Australia’s upcoming July CPI report, which is due later this week. Expectations are for a slight dip in inflation to 3.6% from 3.8%, with the trimmed mean potentially falling below 4.0%. Despite this, it is unlikely to sway Reserve Bank of Australia (RBA) Governor Michele Bullock, who is working to convince markets that a rate cut is not imminent.
Japan’s key market-moving data is also slated for release at the end of the week.
Last week, the combination of falling US yields and a broader decline in the dollar pushed the greenback close to JPY144. Meanwhile, the Australian dollar briefly returned to $0.6800, fully recovering from the earlier carry-trade unwind. Today, the AUD is testing the $0.6770 support area.

European Markets
In Europe, the week is shaping up to be relatively quiet unless an unexpected shock arises. The economic calendar is sparse, with today’s German IFO survey showing some softness, but not enough to significantly impact the markets. The key event for the eurozone will be the preliminary CPI data, due at the end of the week.
The euro reached $1.12 last week, and the next technical level to watch is around $1.1275. Meanwhile, sterling settled above $1.32 for the first time since March 2022, with last week’s 2% rally marking its largest two-year advance.

American Markets
This week’s US economic data may hold more interest for economists than for investors and traders. The data is expected to provide insights into the rise in imports, likely indicating inventory buildup ahead of the holiday season.
The US dollar ended last week at a five-month low against the Canadian dollar, hovering near CAD1.3500. Currently, it remains in a narrow range close to this level.