The USD/CHF tumbles by 0.70% on Tuesday, trading at 0.8091, as the latest US inflation report prompted market participants to pare hawkish bets that the Federal Reserve might cut the Fed funds rate this year. 

The Japanese Yen registers gains of over 0.31% against the US Dollar as traders trim hawkish bets following a softer-than-expected US inflation report. The USD/JPY trades at 161.93 after reaching a daily high of 162.48.

AUD/USD trades sharply higher near 0.6990 on Tuesday, approaching the psychological 0.7000 level as the US Dollar (USD) falls following weaker-than-expected United States (US) inflation figures.

The Canadian Dollar (CAD) strengthens sharply against the US Dollar (USD) on Tuesday, drawing support from softer-than-expected US inflation data and rising Oil prices amid escalating tensions in the Middle East.

NZD/USD jumps to a one-month high on Tuesday as traders digest the latest US inflation data, which came in softer than expected and reduced expectations of an imminent Federal Reserve (Fed) interest rate hike. At the time of writing, the pair trades around 0.5820, up nearly 1.23% on the day.

The Japanese Yen (JPY) continues to trade in defensive territory, with the USD/JPY pair pinned near a historic 40-year high around 162.00. However, in a striking divergence from rising global yields, Japanese Government Bonds (JGBs) have begun outperforming. 

The British Pound (GBP) strengthens against the US Dollar (USD) on Tuesday after US inflation data surprised to the downside, reducing expectations of a near-term Federal Reserve (Fed) interest rate hike.

EUR/USD snaps a two-day losing streak on Tuesday as softer-than-expected United States (US) inflation data weighs on the US Dollar (USD) and prompts traders to scale back expectations of a near-term Federal Reserve (Fed) interest rate hike.

TD Securities’ Julie Ioffe and James Rossiter argue that the European Union already possesses key ingredients for stronger long-term growth, including wealthy consumers, productive workers, deep private savings and solid fiscal capacity.

MUFG’s Lee Hardman reports the New Zealand Dollar is the top G10 performer overnight, helped by a hawkish shift in RBNZ rate expectations.

ING’s Francesco Pesole argues that the EUR/USD short-term rate differential is currently supporting the Euro as Gulf tensions rise, helped by a recovery in EUR front-end rates.

GBP/JPY trades in a narrow range on Tuesday as market sentiment remains fragile amid escalating tensions between the US and Iran, which are driving Oil prices higher once again. At the time of writing, the cross trades around 217.10 as the Japanese Yen (JPY) remains broadly weak.

Brown Brothers Harriman’s (BBH) Elias Haddad notes USD/JPY is trading near a 40‑year high above 162.00 while Japanese Government Bonds are outperforming. Strong demand at the 20‑year auction and comments from Finance Minister Satsuki Katayama encouraging more domestic investment support JGBs.

The AUD/USD pair trades 0.35% higher to near 0.6945 during the European trading session on Tuesday. The Aussie pair gains as the US Dollar (USD) underperforms its peers ahead of the United States (US) Consumer Price Index (CPI) data for June, which will be published at 12:30 GMT.

MUFG’s Lee Hardman notes Japanese government bond yields have fallen despite higher global yields, with Japanese Government Bonds (JGBs) supported by verbal intervention from policymakers.

The British Pound (GBP) appreciates against the US Dollar (USD)  on Tuesday to trim previous losses and return to the 1.3375 area, aiming to retest resistance at the key 200-day Simple Moving Average (SMA).

ING strategist Francesco Pesole notes that the New Zealand Dollar is the best-performing G10 currency since early week, boosted by last week’s RBNZ rate hike and hawkish repricing. He says FX markets are rewarding currencies with scope for further domestic tightening, beyond commodity exposure.

XAG/USD gains ground after two days of losses, trading around $58.10 per troy ounce during the European hours on Tuesday. The technical analysis of the daily chart shows that the spot price is remaining within the descending channel pattern.

DBS Group Research economist Radhika Rao notes India’s onshore markets are closely watching global geopolitical risks as Oil prices rebound.

Commerzbank’s Tatha Ghose highlights that Turkey’s current-account deficit widened in May and remains structurally driven by savings-investment imbalances. Portfolio inflows are muted, with May showing renewed outflows and signs of capital flight.

The USD/JPY pair remains on the back foot through the first half of the European session on Tuesday. Intervention risks support the Japanese Yen (JPY) and act as a headwind for spot prices amid a softer US Dollar (USD).

The New Zealand Dollar (NZD) appreciates against the US Dollar (USD) on Tuesday, hardly affected by the risk-averse scenario.

United Overseas Bank’s Quek Ser Leang and Lee Sue Ann report USD/JPY rebounded from 161.26 to trade between 161.55 and 162.48, closing firm at 162.42. They see scope for a test of 162.70 while keeping 163.00 out of view, with support at 162.20/162.00.

The Euro (EUR) trades slightly higher to near 1.1395 against the US Dollar (USD) during the European trading session on Tuesday. The major currency pair gains as the US Dollar corrects ahead of the United States (US) Consumer Price Index (CPI) data for June, which will be published at 12:30 GMT.

The US Bureau of Labor Statistics (BLS) will publish the June Consumer Price Index (CPI) data on Tuesday. The report is expected to show a decline in consumer inflation, driven by the easing of crude Oil prices following the ceasefire announcement between the United States (USD) and Iran. 

The US Dollar (USD) is trading practically flat against the Swiss Franc (CHF) on Tuesday, consolidating gains after a 0.7% rally on Monday, boosted by rising geopolitical tensions and hawkish Comments by Federal Reserve (Fed) Governor Christopher Waller.

The Canadian Dollar (CAD) trades higher against its major currency peers, except antipodeans, during the European trading session on Tuesday.

The GBP/JPY cross struggles to gain any meaningful traction and seesaws between tepid gains/minor losses through the early part of the European session on Tuesday.

Volkmar Baur at Commerzbank notes the Australian Dollar (AUD) has traded largely sideways, with markets waiting for clarity on Middle East developments and upcoming Australian labor and inflation data ahead of the August 11 Reserve Bank of Australia (RBA) meeting.

The Australian Dollar (AUD) posts moderate gains against the US Dollar on Tuesday, bouncing to the 0.6930 area from session lows near 0.6910.