Good morning traders from a mostly sunny 16°C Amsterdam, where it is a fresh start around IntelliTrade HQ before temperatures climb toward 23°C later this afternoon. Coffee is on the desk, the RBA has already given us the first major central-bank decision of the week, oil is pushing higher again, and tomorrow’s U.S. CPI has become even more important than it looked a few days ago.
Overall Market Sentiment:
The mood is cautious and mixed.
The RBA kept rates at 4.35% this morning and made it very clear that inflation is still too high. At the same time, Brent has climbed back toward $88 as U.S.-Iran negotiations stall, which is rebuilding some of the energy pressure markets were happily removing last week.
My actual view today is that Friday’s weak U.S. jobs report still matters, but the market has probably become too comfortable with the idea that softer employment automatically means a softer Fed.
Tomorrow decides that.
If U.S. inflation cools alongside employment, the dollar’s recent loss of momentum gets a much cleaner macro foundation. If inflation stays sticky while hiring weakens, we are back in the uncomfortable stagflation conversation very quickly.
The mistake here would be assuming weak jobs already settled the Fed debate.
Geopolitics:
U.S.-Iran negotiations around a broader peace agreement and the reopening of the Strait of Hormuz have hit another obstacle, and oil has reacted immediately. Brent is around $88 after jumping roughly 5% on Monday.
That matters because the market spent most of last week removing the energy premium and reducing inflation expectations. Some of that work is already being reversed.
I would not overcomplicate this. The geopolitical story matters today because it changes tomorrow’s inflation interpretation. Softer CPI with Brent pushing higher would still give the Fed some relief, but the forward-looking inflation picture would remain less comfortable.
Macro Calendar:
Today
- RBA decision: The cash rate was left unchanged at 4.35% in a unanimous decision. The bank acknowledged that tighter financial conditions are slowing the economy, but inflation remains too high and policymakers explicitly kept further tightening available if upside risks return.
- RBA forecasts: The bank expects household spending and the labour market to cool gradually while inflation takes a long time to return comfortably toward target. That creates a more balanced AUD story than a simple hawkish hold because the RBA is worried about inflation and slowing growth at the same time.
- U.S. existing home sales: Housing remains one of the clearest places where high borrowing costs are affecting the economy. Markets will watch whether lower recent Treasury yields have started helping activity or whether affordability remains the bigger problem.
The rest of this week
- Wednesday, U.S. CPI: This is the main event. Expectations are for only a modest monthly increase in headline and core inflation. After July payrolls declined, a softer inflation report would strengthen the case for Fed patience, while an upside surprise could quickly rebuild September tightening expectations.
- Thursday, U.S. PPI: Producer prices should show whether tariffs, energy costs and wider supply pressure are still feeding into business costs. This becomes especially useful if CPI sends a mixed message.
- Thursday, UK GDP: Second-quarter and June growth data will test whether sterling’s recent resilience has a proper domestic foundation. The UK needs growth to remain stable enough that restrictive Bank of England policy does not become a bigger economic problem.
- Friday, U.S. retail sales and consumer sentiment: Weak employment becomes much more concerning if household spending starts slowing too. Strong consumption would argue that the economy still has some cushion even as hiring cools.
Currency Outlooks:
⚖️ USD - Jobs weakened the story, oil is trying to rebuild it
The dollar index is holding around 99.8, with EUR/USD near 1.1540, GBP/USD around 1.3510 and USD/JPY back near 159.2.
Friday’s employment data removed a major piece of dollar support. Hiring weakened, earlier months were revised lower and Fed expectations cooled.
But oil is now pushing back.
Brent near $88 means markets cannot simply extrapolate last week’s decline in energy inflation. Tomorrow’s CPI now has to tell us whether underlying inflation is cooling fast enough to outweigh that renewed pressure.
The cleaner read for me is mixed today.
Dollar risks lean softer if core inflation cools and Treasury yields fall with it. That bias disappears quickly if CPI is firm enough to remind markets that the Fed still has an inflation problem despite weaker employment.
The dollar has cooled, but tomorrow decides whether it is genuinely losing its macro advantage.
⚖️ EUR - Oil has returned as the uncomfortable part of the story
EUR/USD is trading around 1.1540, still holding much of the recovery that followed Friday’s weak U.S. labour data.
The euro benefited when oil dropped toward $80 because Europe’s import-cost problem became easier. Brent near $88 starts reversing part of that advantage.
That matters because Europe does not have enough domestic growth momentum to absorb another major energy shock comfortably.
The cleaner read is balanced. Lower U.S. rate expectations remain supportive, but higher oil works directly against the euro-area growth and inflation mix.
EUR risks improve if U.S. CPI cools and crude settles down again. They weaken if both American yields and energy prices start moving higher together.
🔺 GBP - Sterling is holding up, but GDP needs to confirm why
GBP/USD is near 1.3510, keeping sterling close to its strongest area in several weeks.
The pound has benefited from softer U.S. yields while the Bank of England remains relatively cautious about inflation. That gives GBP a reasonable relative policy foundation.
Thursday is the important test.
If UK GDP shows that growth remained resilient through the second quarter, sterling has a stronger argument than simple dollar weakness. If growth disappoints, the market has to question how long restrictive policy can remain supportive.
For now, risks lean modestly toward strength. That tilt weakens if growth disappoints or another oil surge starts damaging the UK inflation outlook.
🔺 CAD - Strong jobs and stronger oil finally point the same way
CAD has one of the cleaner domestic stories among the major currencies right now.
Last Friday’s Canadian employment report was strong, unemployment fell and USD/CAD moved toward the 1.39 area. Now Brent has recovered toward $88 as well.
For several weeks, Canada had either oil support without strong domestic data or better data while crude was falling. Today those forces are finally working in the same direction.
Risks lean toward relative strength while labour resilience and higher energy prices remain in place.
The view becomes less convincing if oil’s rise develops into a broader global growth problem rather than a Canada-specific terms-of-trade benefit.
⚖️ CHF - Geopolitical support returns, but yields still matter
The franc is getting some defensive support back as Middle East negotiations become less convincing and oil rises.
At the same time, the market is not in a full defensive regime. Equity futures remain relatively stable and tomorrow’s CPI is keeping attention firmly on rates.
CHF risks therefore remain balanced.
Its defensive case strengthens if the geopolitical situation deteriorates or inflation fears hit equities harder. Against USD specifically, the large yield difference remains the limitation.
🔻 JPY - Half the intervention move has already disappeared
USD/JPY has moved back toward 159.2, after reaching roughly 155.2 following the coordinated U.S.-Japan intervention.
That is the part I would pay attention to.
Intervention clearly changed the speed of yen weakness, but the underlying yield problem never disappeared. As U.S. yields stabilised and oil moved higher again, JPY started giving back part of those gains.
Japan is also an energy importer, so Brent near $88 is not helpful.
Risks lean toward weakness again, but intervention sensitivity remains extremely high. Another rapid move toward July’s extremes would bring official action straight back into the conversation.
The mistake here would be treating 159 the same way the market treated it before intervention. Authorities have already shown they are prepared to become involved.
⚖️ AUD - The RBA paused without declaring victory
AUD/USD is holding around 0.7050 to 0.7060, close to its strongest area in roughly eight weeks.
The RBA kept rates at 4.35%, which was expected. The useful part was everything around that decision.
Inflation remains too high. Policymakers are prepared to respond again if upside risks materialise. At the same time, consumer spending is cooling, housing conditions have weakened and labour-market pressure is easing.
That is why I see AUD as mixed rather than clearly stronger after the decision.
The RBA has preserved the currency’s rate support, but it also told us restrictive policy is doing more work on the economy.
I would not overcomplicate this. AUD keeps a reasonable policy foundation while inflation stays elevated, but tomorrow’s U.S. CPI can easily become the bigger driver again.
⚖️ NZD - Softer labour data still limit the domestic case
NZD/USD is holding around 0.5880 to 0.5890, remaining fairly stable despite the RBA event next door.
New Zealand’s problem is different from Australia’s. Unemployment has risen to 5.6%, wage pressure has cooled and the domestic labour market is showing more slack.
That makes the RBNZ’s inflation problem less one-sided.
NZD can benefit if U.S. inflation cools and the dollar weakens, but its domestic policy support is weaker than AUD’s right now.
Risks remain balanced to slightly soft.
Cross-Asset Wrap:
- 🪙 Gold: Gold is trading around $4,400 to $4,415, holding near its strongest area in several weeks after extending the rally that followed Friday’s weak U.S. jobs report. Softer Fed expectations and lower real yields have been the main support, while renewed geopolitical uncertainty is adding a secondary layer. Watch Wednesday’s CPI because gold’s next major macro test is whether real yields continue falling or rebound on sticky inflation. [USD] [REAL YIELDS] [CPI]
- 🥈 Silver: XAG/USD is trading around $64.50 to $65.00, easing from Monday’s surge above $65 but remaining sharply higher than last week’s levels. Dollar and yield expectations remain important, while strong technology investment supports the industrial-demand side even as global growth remains uneven. Watch whether CPI keeps the rates backdrop supportive without creating a larger growth scare. [USD] [YIELDS] [INDUSTRIAL DEMAND]
- 🛢 Oil (Brent): Brent is trading around $87.50 to $88.10 per barrel, its highest area since the end of July after jumping roughly 5% on Monday. Stalled U.S.-Iran negotiations and uncertainty over reopening the Strait of Hormuz are rebuilding the supply premium, while hopes of an eventual agreement are preventing a return to July’s extreme levels. Watch actual shipping access and whether diplomatic talks make measurable progress. [SUPPLY] [GEOPOLITICS] [INFLATION]
- 📈 Stocks: The S&P 500 finished Monday around 7,753, down roughly 0.1%, while the Nasdaq slipped about 0.3% and U.S. futures are modestly firmer this morning. Higher oil and caution before CPI are offsetting continued support from strong corporate earnings and AI-related investment. Watch whether tomorrow’s inflation report allows equities to keep treating weak employment as rate relief rather than a warning about growth. [CPI] [EARNINGS] [RISK]
- ₿ Crypto: Bitcoin is trading around $63,800 to $64,000, after ranging between roughly $63,800 and $65,300 today. Higher oil and uncertainty before CPI are limiting the liquidity story, while softer Fed expectations after Friday’s jobs report remain supportive underneath. Watch whether real yields move lower after CPI or whether sticky inflation keeps BTC contained inside its recent range. [LIQUIDITY] [REAL YIELDS] [RISK]
The main thing I care about today is that the market is trying to hold two stories at the same time.
Friday told us employment is weaker.
Today, oil is telling us inflation risk can still return.
That is why tomorrow matters so much.
If core CPI cools properly, then the picture gets easier. Hiring is weakening, inflation is moving in the right direction and the Fed has much less reason to become more restrictive. That environment keeps pressure on the dollar and gives lower real yields more room to support gold and risk-sensitive assets.
If CPI is firm, the whole story changes.
Then policymakers are looking at weaker employment while inflation remains difficult. That is not the clean environment equities have been celebrating.
The mistake here would be assuming a stronger inflation number simply restores the dollar story from July.
It could support USD through yields, yes. But persistent inflation combined with weakening employment is not the same macro environment as persistent inflation combined with strong growth.
That difference matters.
The other thing I would not misunderstand today is the RBA.
It paused, but it did not sound comfortable. Inflation remains too high and another policy move is still possible. At the same time, the economy is clearly responding to the tightening already delivered.
That leaves AUD with some rate support, but not a perfect growth story.
JPY has the opposite problem. Official support remains powerful, but the yield gap is already pulling USD/JPY back toward 160.
CAD looks cleaner after strong employment and the rebound in crude. GBP now needs Thursday’s GDP to confirm that its recent resilience makes sense. EUR remains supported by softer U.S. yields but is once again exposed to higher energy costs.
So my actual view today is fairly simple.
The dollar’s fundamental support weakened after Friday’s jobs report, but tomorrow’s CPI still has the ability to rebuild part of it.
I would not overcomplicate this.
Friday changed the labour story.
Today brought the inflation risk back.
Tomorrow tells us which one the market has to respect more.
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This is general, educational macro and FX commentary. It is not investment advice and not a trading signal.
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