Markets weren’t exactly hungry for risk on Tuesday, as the safe-haven dollar dominated while commodities, crypto, and stocks closed out deep in the red.
Meanwhile, Canada’s latest CPI print bolstered BOC interest rate cut expectations, triggering some losses for their currency as well.
Here are headlines you may have missed in the last trading sessions!
Headlines:
- Australia Westpac Consumer Confidence Index for August 2025: 98.5 (93.2 forecast; 93.1 previous)
- Australia RBA Connolly:
- Euro area Current Account for June 2025: 38.9B (30.0B forecast; 1.0B previous)
- Ukraine President Zelensky confirmed U.S. support for security guarantees, reiterated call for peace
- In an interview, U.S. Secretary of State Rubio mentioned that Trump suggested that Putin meet with Zelensky during their call
- European officials reportedly gearing up to work on security guarantees for Ukraine
- Canada Inflation Rate YoY for July 2025: 1.7% (1.8% forecast; 1.9% previous); Inflation Rate MoM for July 2025: 0.3% (0.4% forecast; 0.1% previous)
- Canada Core Inflation Rate YoY for July 2025: 2.6% (2.7% forecast; 2.7% previous); Canada Core Inflation Rate MoM for July 2025: 0.1% (0.3% forecast; 0.1% previous)
- Canada CPI Median YoY for July 2025: 3.1% (3.1% forecast; 3.1% previous)
- Canada CPI Trimmed-Mean YoY for July 2025: 3.0% (3.0% forecast; 3.0% previous)
- U.S. Building Permits Prel for July 2025: 1.35M (1.39M forecast; 1.39M previous)
- U.S. Housing Starts for July 2025: 1.43M (1.29M forecast; 1.32M previous)
- New Zealand Global Dairy Trade Price Index for August 19, 2025: -0.3% (0.6% forecast; 0.7% previous)
- U.S. Treasury Secretary Bessent confirmed plans to raise tariffs on India over its purchases of Russian oil
- Fed official Bowman, who voted to cut in the latest Fed meeting, said she has not changed her monetary policy view
- U.S. API Crude Oil Stock Change for August 15, 2025: -2.4M (1.5M previous)
- Japan Machinery Orders MoM for June 2025: 3.0% (-0.5% forecast; -0.6% previous)
- Japan Balance of Trade for July 2025: -117.5B (250.0B forecast; 153.1B previous)
- Japan Imports YoY for July 2025: -7.5% (0.2% previous)
- Japan Exports YoY for July 2025: -2.6% (-0.5% previous)
- China Loan Prime Rate 1Y for August 20, 2025: 3.0% (3.0% forecast; 3.0% previous); China Loan Prime Rate 5Y for August 20, 2025: 3.5% (3.5% forecast; 3.5% previous)
- New Zealand RBNZ Interest Rate Decision for August 20, 2025: 3.0% (3.0% forecast; 3.25% previous)
Broad Market Price Action:
Despite some signs of progress in Ukraine-Russia peace talks, majority of higher-yielding assets took a beating on Tuesday as the safe-haven dollar flexed its muscles while traders positioned ahead of Powell’s Jackson Hole testimony.
Crude oil, which initially caught gains during the early Asian session, took on a bearish trajectory on positive geopolitical updates that calmed supply jitters. As it turned out, Ukraine confirmed U.S. support for their security guarantees while the Trump-Putin call was said to have an invitation for Russian and Ukranian leaders to meet.
European equities managed to pick up on some risk-taking thanks to these developments, with major French, Spanish and Italian indices closing at record levels. However, the market mood appeared to shift during U.S. market hours, leading the S&P 500 index to slump 0.59% while the Nasdaq closed 1.46% lower as rumors swirled that Fed head Powell could strike a more measured tone during his upcoming speech.
Still, Treasury yields ended the day lower, with the 2-year yield down 1.9 basis points and the 10-year yield falling 2.9 basis points, as Fed official Bowman reiterated her dovish stance. Gold and bitcoin appeared to fall victim to dollar strength, as the latter dipped to the $113K levels.
FX Market Behavior: U.S. Dollar vs. Majors:
Dollar pairs were chilling in their ranges during the Asian session since there were no data points out then, and traders appeared to be biting their nails ahead of Fed head Powell’s Jackson Hole speech.
However, majors broke off in different directions as the London session kicked off, with the dollar gaining some ground against higher-yielding commodity currencies. European currencies were able to rake in some gains, as positive developments on the Russia-Ukraine front triggered some gains for European stock markets.
The Canadian dollar chalked up additional losses after Canada’s July CPI report showed a dip in headline annual inflation, boosting expectations for another BOC interest rate cut in their next meeting. The Aussie and Kiwi followed suit as risk-off flows appeared to pick up on talks that Fed head Powell could take a more cautious approach on easing during his highly-anticipated testimony later in the week.
By session’s end, USD closed mixed, holding on to gains versus commodity currencies while also catching some pips versus EUR (+0.12%) and GBP (+0.07%) late in the day but winding up slightly lower against safe-haven peers CHF (-0.09%) and JPY (-0.19%).
Upcoming Potential Catalysts on the Economic Calendar
- New Zealand RBNZ Press Conference at 3:00 am GMT
- Germany PPI at 6:00 am GMT
- U.K. Headline and Core Inflation Rate 6:00 am GMT
- U.K. Retail Price Index YoY for July 2025 at 6:00 am GMT
- U.K. Producer Price Index at 6:00 am GMT
- Euro area Labour Cost Index at 9:00 am GMT
- Euro area Headline and Core CPI (Final) at 9:00 am GMT
- U.S. EIA Crude Oil Stocks Change for August 15, 2025 at 2:30 pm GMT
- U.S. Fed official Waller’s Speech at 3:00 pm GMT
- U.S. FOMC Meeting Minutes at 6:00 pm GMT
- U.S. Fed official Bostic’s Speech at 7:00 pm GMT
- New Zealand Trade Balance at 10:45 pm GMT
With the RBNZ just announcing their decision to cut interest rates by 0.25% earlier in the session, the spotlight is now turning to Governor Hawkesby’s press conference that could contain clues on their future policy moves.
After that, we’ve got the U.K. CPI report that could settle the score between hawks and doves at the BOE, likely triggering strong GBP volatility. The action doesn’t end there, as the FOMC meeting minutes are scheduled for release during the latter part of the U.S. session, likely pushing USD pairs around then.
As always, look out for global trade developments and geopolitical headlines that could influence overall market sentiment. Stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!
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