US dollar will maintain range oscillation before CPI data is released

On the Asian session on Tuesday, the US dollar index hovered around 98.51, and the US dollar index rose 0.24% to 98.48 on Monday, reflecting the hawkish adjustments in the market before the data was released. The market's attention has turned to the upcoming U.S. inflation data. The Consumer Price Index (CPI) will be released on Tuesday, and the Producer Price Index (PPI) will be released on Thursday. These data will provide a key reference for the Fed's interest rate path.

Analysis of major currencies

Dollar: As of press time, the U.S. dollar index hovers around 98.51, the U.S. strengthens across the board on Monday, and the U.S. will release inflation data on Tuesday, which may help determine whether the Federal Reserve will reduce borrowing costs next month. If the CPI data is higher than expected, the threshold for the Fed's interest rate cut in September will increase, which will often provide a boost to the US dollar. But if inflation cools down, especially in a weak labor market, the likelihood of interest rate cuts will rebound—which could put pressure on the dollar index. Technically, the market is currently considering 98.683 as a key hub. If the US dollar can break through this level cleanly, it is expected to launch an impact on the strong resistance range around 99.17–99.83.

Euro: As of press time, the euro/dollar hovered around 1.1615, with the euro/dollar falling slightly by 0.26% on Monday as traders bought the dollar ahead of another upcoming U.S. inflation report. Italy's disclosure prices met the European Central Bank's (ECB) target, further demonstrating the need to maintain interest rates even at the next meeting. Next, the EU's schedule will include the EU and Germany August ZEWSurveys, French inflation and growth data in the region. In the U.S., the economic schedule is expected to release consumer and producer inflation data, Fed speeches, unemployment claims, industrial production data, retail sales and the University of Michigan August consumer confidence index. Technically, the EUR/USD rise has stopped with bearish candles appearing continuously, although the pair remains above 1.1600. The Relative Strength Index (RSI) shows that buyers appear to be losing momentum, with the index falling below the neutral level of 50 and turning bearish. That is, the seller needs to push the pair down to 1.1600 per day. If successful, the next support level will be the August 5 low of 1.1527. Breakthroughs through the latter will expose 1.1500. On the contrary, if the EUR/USD remains above 1.1600, traders will focus on 1.1650 and look forward to breaking through 1.1700.

GBP: As of press time, GBP/USD hovered around 1.3431, and GBP/USD hovered around 1.3430 on Monday, and traders were worried before the release of important upcoming data. UK labor data will be released in the upcoming London market hours, while US Consumer Price Index (CPI) inflation data will be released later in the US trading hours. The latest data on changes in the number of people applying for unemployment benefits in July will be released on Tuesday, as well as data on rolling three-month job changes to July. Technically, GBP/USD is restricted near the 50-day index moving average (EMA) near 1.3430, and the market is waiting for key basic data while the price trend stagnates. The short-term uptrend for GBP/USD may have ended or temporarily rested, depending on Tuesday's trend, but the lower high-point technical pattern increases the possibility of a new bearish force in the near future.

Summary of news from the foreign exchange market

1. Trump said that seeing Putin would be a tentative meeting

U.S. President Trump talked about his meeting with Russian President Putin at a White House press conference on August 11, saying that this was a "tentative meeting". He believed that the two sides "will have a constructive dialogue" and that he would "tell Putin to end the war." Trump said he will speak with Ukrainian President Zelensky, "the next meeting will be held with Zelensky, or at the same time as Putin and Zelensky," and will also speak with European leaders after the meeting.

2. China and the United States once again suspended the implementation of 24% tariffs for 90 days

Joint Statement of the Sino-US Stockholm Economic and Trade Talks: 1. The United States will continue to modify the implementation of the imposition of adjudication tariffs on Chinese goods (including goods from the Hong Kong Special Administrative Region and the Macao Special Administrative Region) stipulated in Executive Order No. 14257 of April 2, 2025., from August 12, 2025, the implementation of a 24% tariff will be suspended for 90 days, and the remaining 10% tariffs imposed on these vejck.cnmodities in accordance with the executive order shall be retained. 2. China will continue to (I) amend the implementation of adjudication tariffs imposed on US goods stipulated in the 2025 No. 4 of the Tax vejck.cnmission Announcement, and suspend the implementation of a 24% tariff for 90 days from August 12, 2025, while retaining the remaining 10% tariff imposed on these goods; and (II) Take or maintain necessary measures to suspend or cancel non-tariff countermeasures against the United States according to the agreement in the Geneva Joint Statement.

3. Trump's team included Bowman, Jefferson and Logan as candidates for Fed Chairman

According to two U.S. government officials, two Fed Vice Chairman Bowman and Jefferson and Dallas Fed Chairman Logan are considering taking the position next year when the position of Fed Chairman is vacant. Finance Minister Besent, who is in charge of the selection, said he will interview more candidates in the vejck.cning weeks. Officials said Trump is expected to make his final announcement this fall. Other candidates still under consideration include Trump's economic adviser Kevin Hassett, Fed governor Waller, economist Mark Summerlin and former Fed officials Kevin Wash and James Brad, people familiar with the matter said. Last week, Trump nominated Stephen Milan, chairman of the White House Economic Advisory vejck.cnmittee, to fill the Fed's seat, and officials said the Trump team did not see the need to rush to find a new chairman as Milan's nomination was submitted to the Senate for confirmation. Becente will interview all the presidential candidates and then recommend a brief list of candidates to the president for meeting with the president.

4. US media: The meeting location of the US and Russian leaders may be at the Alyeska Resort

According to the US "Alaska Landmines" website on the 11th, US President Trump and Russian President Putin may meet at the Alyeska Resort in the resort town of Gederwood, Alaska, USA. The website wrote on social media: "I got the news that Trump and Putin's meeting may be held at the Alyeska Resort in Guedwood. Interestingly, the period from August 12 to 16 was vejck.cnpletely wiped off on their reservation calendar." Russia News Agency today forwarded the US "Alaska Landmines" report, but the news has not been officially confirmed by the United States and Russia.

5. Trump nominated E.J. Anthony as the next Director of the Bureau of Labor Statistics

U.S. President Trump issued an article on the TruthSocial social platform on Monday local time to announce that he would nominate economist Dr. E.J. Antoni as the next Director of the Bureau of Labor Statistics. Trump said, "Our economy is booming, and Dr. Anthony will ensure that the published data is true and accurate. I believe Dr. Anthony will do a great job in this new position. Congratulations, Anthony!" Recently, the Wall Street Journal reported that E.J. Anthony, as the chief economist of the Heritage Foundation, has long questioned the agency's employment data statistics.method. The White House’s move to consider appointing prominent critics heralds Trump plans to make major reforms to the agency.

Institutional View

1. Nomura Securities: The RBA is expected to cut interest rates by 25 basis points, but the possibility of dovish guidance is low.

Nomura Securities economist Hannah Liu said that the RBA is expected to unanimously agree to cut interest rates by 25 basis points today, but it is unlikely to provide dovish guidance. The RBA may reiterate its "prudent and gradual" further easing policy. The CPI data for the second quarter showed that the RBA had previously had a little excessive concern about inflation. Although the average unemployment rate in the second quarter was 4.2%, it rose slightly to 4.3% in June. The recent economic activity data has performed well, which reminds the market: For the RBA, the current logic of interest rate cuts is more based on the policy space provided by the decline in inflation, rather than the need for continuous interest rate cuts in economic weakness.

2. Bank of America warns: inflation continues to exceed targets and tariffs are raised, the reason for the Federal Reserve to cut interest rates in September is insufficient. Bank of America pointed out in its latest research report that the Federal Reserve should restrain the impulse to cut interest rates at its policy meeting in September, and recent economic data does not support the early launch of the easing cycle. The bank stressed that policymakers supporting interest rate cuts underestimated the impact of the labor supply shock and the stubbornness of inflation, which is still above the Fed's target of 2%. The report warns that the latest tariff hikes could have a "more severe and lasting impact" on prices. "If interest rates are cut in September, there may be a risk of opening a loose cycle before inflation has peaked," the Bank of America analysis team wrote, maintaining its benchmark forecast of "no interest rate cuts this year." The bank specifically pointed out that the downward revision of the U.S. non-farm employment data increases the possibility of so-called "passive interest rate cuts" - that is, interest rate cuts driven by deterioration in labor markets rather than anti-inflation results.

3. Institutions: The Canadian dollar may be under further pressure under the double pressure of trade disputes and interest rate cuts.

Strategists from the Finance Department of National Bank of Canada pointed out that due to the failure of trade tensions in the United States and Canada, and the Bank of Canada may cut interest rates in September, the Canadian dollar may weaken further in the next few weeks. The current exchange rate of the US dollar against the Canadian dollar hovers in the range of 1.3780, a significant increase from the low of 1.3600 in late July. The bank predicts that the US dollar will continue to strengthen this quarter, with a target of 1.3900 mark. Market surveys from the Bank of Canada from late June to early July showed that the respondents expect at least two interest rate cuts in 2025. Expectations for interest rate cuts in September heated up after disappointing employment data in July, which exposed the expansion of idle capacity in Canada's economy.

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