The US dollar remains robust, with the market testing and surpassing the JPY 160 level during European trading. Despite Japanese officials indicating they do not defend a specific exchange rate, market participants are cautious, with some intending to sell dollars if the rate stays above this threshold. In contrast, the Australian dollar has shown resilience against the greenback’s strength, bolstered by a stronger-than-expected monthly inflation report that increases the likelihood of a rate hike.
Equities are on the rise, while the firm US dollar and higher interest rates are putting pressure on gold, which has stabilized around $1,316 after hitting a six-day low near $1,310. August WTI is steady around $81.50.

Asia Pacific Markets
The news flow in the Asia Pacific region is light, with notable data being the significant rise in Australia's monthly CPI, which increased to 4.0% year-over-year in May from April's 3.6%. The Reserve Bank of Australia meets next on August 6.
The dollar traded within a JPY 159.20-JPY 159.75 range yesterday but has edged above JPY 160 in the European morning.
Meanwhile, the Australian dollar is consolidating within a narrow range around the midpoint of its established range ($0.6600-$0.6700).

European Markets
The European economic calendar is sparse, leaving the focus on political developments.
The European Central Bank (ECB) has cut rates before the Federal Reserve. Swaps market data shows a slightly higher probability of the ECB cutting rates at its September 12 meeting compared to the Fed at its September 18 meeting.
The euro traded within Monday's range yesterday and remains stable within the same bounds (~$1.0685-$1.0745).
Sterling, after trading in its narrowest range yesterday, remains below $1.2700, finding support near $1.2660 in Europe.

American Markets
Key US economic data will be released later in the week, particularly on Thursday and Friday. Today's new home sales data for May is not expected to significantly impact the market.
The stronger-than-expected May CPI has extended the Canadian dollar’s rally, pushing the greenback down to nearly CAD 1.3625 as the market reduces the likelihood of a Bank of Canada rate cut next month. Although the US dollar has since rebounded, it has struggled to maintain a position above CAD 1.3670 but is testing this area today.