The US dollar traded with a stronger tone against most major currencies, although movements remained largely confined to familiar trading ranges. Market attention continued to focus on rising tensions involving Iran, which helped keep August WTI crude oil near the $80 per barrel area. Recent US economic releases painted a mixed picture. June job growth disappointed earlier this month, while June consumer inflation came in softer than expected. Those inflation figures significantly reduced speculation that the Federal Reserve could raise interest rates at its July meeting. Despite that shift, Fed Chair Warsh reiterated his commitment to lowering inflation during congressional testimony and was scheduled to appear again before lawmakers.
Asia Pacific Markets
Economic news across Asia delivered mixed signals. China reported weaker-than-expected second-quarter GDP growth, with quarterly and annual expansion both slowing from the first quarter. At the same time, June retail sales and industrial production exceeded forecasts, suggesting pockets of resilience. Additional data showed lending activity improved but fell short of expectations, while weakness persisted in property investment and housing prices. In Japan, industrial production for May was revised sharply lower and core machine orders posted a larger-than-expected decline. However, service-sector activity strengthened significantly. Regional equity markets generally advanced, led by strong gains in South Korea and Taiwan, while Chinese stock markets were slightly weaker.
European Markets
European economic data surprised to the downside after eurozone industrial production declined in May instead of posting the expected increase. Although April figures were revised higher, the latest report highlighted uneven performance across major economies. Germany and Spain recorded stronger activity, while France and Italy showed declines. In currency trading, the euro remained trapped within a range established after the weak US employment report earlier this month. The single currency moved toward the upper end of that range following softer US inflation but struggled to build momentum above recent highs. European government bonds weakened modestly, with yields rising by roughly two to three basis points after recovering from earlier losses.
American Markets
US financial markets responded positively to the softer inflation data. Treasury yields fell sharply after the CPI release, particularly at the short end of the curve, although yields edged higher again during the latest session. Equity markets advanced, with the Nasdaq leading gains and the S&P 500 recovering a substantial portion of its previous decline. The Canadian dollar recorded its strongest daily performance since late April as US-Canada yield differentials narrowed. Commodity markets were active as well. Gold climbed more than 1% following the inflation report despite expectations that lower inflation might reduce demand for defensive assets. Oil remained volatile, briefly exceeding $81 before settling back near $80, supported by geopolitical developments and renewed concerns about Middle East tensions.