European Session Wrap: Yen Weakens as Markets Adopt Cautious Stance Ahead of US CPI
Key Takeaways
- •Investors are focused on the upcoming July US CPI report as a key indicator for Federal Reserve monetary policy decisions.
- •Iran's foreign ministry stated that no negotiations with the United States are underway, leaving the Strait of Hormuz arrangement unimplemented.
- •WTI crude oil prices gained 1.6% to settle at $79.43 despite the stalled US-Iran developments.
- •The Japanese yen continued its decline, bringing the USD/JPY exchange rate near the 160 level where Japan previously intervened.
- •Both S&P 500 and Nasdaq futures remained flat, indicating a restrained risk appetite among market participants.
Headlines
- The USD is at a crossroads ahead of CPI, while the AUD awaits RBA rate decision
- Iran foreign ministry reaffirms that there are no negotiations with the US currently
- Oil prices trim losses on delayed US-Iran deal; lack of US attacks keeps hopes alive
- Gold price forecast: Why 4,432 could decide whether the bullish move extends
- Euro area investor confidence returns to positive territory in August – Sentix
Market Snapshot
- Gold: Down 0.2% to $4,333
- Currencies: GBP leads, JPY lags on the day
- WTI Crude: Up 1.6% to $79.43
- Equities: S&P 500 futures flat, Nasdaq futures flat
- US 10-year yields: Up 0.5 bps to 4.66%
- Bitcoin: Flat at $65,079
Session Summary
Markets opened the new week with a cautious tone, as the soft US jobs report from Friday failed to generate any meaningful follow-through. Attention now shifts to the July US CPI report, scheduled for release on Wednesday, a key inflation gauge the Federal Reserve monitors closely in calibrating monetary policy. The data leaves participants with little else to act on in the interim.
On the geopolitical front, US-Iran developments remain stalled. The Strait of Hormuz arrangement has yet to be implemented, and Iran's foreign ministry has reiterated that no negotiations with the United States are currently underway. Despite this, oil prices edged higher, with WTI crude gaining 1.6% to settle at $79.43.
In the currency space, the Japanese yen resumed its decline, with USD/JPY rising 0.7% to 158.85. The pair has drawn market attention as it trades near the 160 level where Japanese authorities intervened to support the currency in 2024. The yen's persistent weakness reflects the wide interest-rate gap between the Bank of Japan's accommodative stance and the Federal Reserve's higher policy rates. The US dollar itself traded within narrow ranges against other major currencies, showing little net change on the day.
Equity markets reflected a subdued risk appetite, with both S&P 500 and Nasdaq futures holding flat. Meanwhile, US 10-year Treasury yields ticked 0.5 bps higher to 4.66%.
Precious metals delivered a mixed performance: gold slipped 0.2% to $4,333, while silver gained 0.8% to reach $64.06.
Overall, the session unfolded at a measured pace, with market participants gradually positioning themselves ahead of the key inflation data due later in the week before committing to more decisive moves.
