The US dollar gained ground against commodity-linked currencies after the release of July inflation figures. The annual Consumer Price Index (CPI) registered 3.4%, matching market forecasts and edging down from the prior reading of 3.5%. On a monthly basis, prices increased by 0.1%. Core inflation likewise aligned with expectations, posting 0.2% month-on-month and 2.5% year-on-year.

Although price pressures continued to moderate, the report offered no additional disinflationary surprise for markets. Inflation is gradually trending toward the Federal Reserve's 2% target, yet the current pace of decline remains insufficient to meaningfully bolster expectations of an imminent loosening of monetary policy. With core inflation still half a percentage point above that target, traders have had little reason to accelerate the timeline for rate cuts they had already been pricing in. Against this backdrop, the US dollar managed to claw back a portion of its earlier losses.

USD/CAD

The Canadian dollar has been sensitive to the monetary policy divergence between the Federal Reserve and the Bank of Canada, which began lowering its policy rate earlier in the year while the Fed has held steady. That divergence has been a key driver of USD/CAD's recent range-bound price action.

On the USD/CAD pair, a bullish engulfing candlestick pattern is forming after price tested key support near 1.3900. Technical analysis suggests the potential for an upward move toward the 1.3980–1.4000 zone. Conversely, a break below the prior session's low could reignite the downtrend, with downside targets in the 1.3770–1.3840 region.

Key scheduled events for USD/CAD:

• Today at 15:30 (GMT+3): US Producer Price Index (PPI)
• Today at 15:30 (GMT+3): US initial jobless claims
• Today at 15:40 (GMT+3): Remarks by Thomas Barkin, member of the US Federal Open Market Committee (FOMC)

AUD/USD

The Australian dollar has drawn support this year from a relatively hawkish Reserve Bank of Australia, which has signaled less urgency to cut rates compared with some of its global peers. That stance has helped underpin AUD strength, making the currency particularly responsive to any shifts in the US rate-cut outlook.

AUD/USD buyers made an attempt to push through key resistance near 0.7100 during today's session. The effort stalled, with price retreating sharply from that level and producing a doji candlestick formation. The emergence of a doji at resistance signals indecision among buyers and raises the probability of a corrective pullback toward 0.7020–0.7040. A bearish outlook would be invalidated by a firm breakout and daily close above 0.7100.

Key scheduled events for AUD/USD:

• Tomorrow at 02:30 (GMT+3): Speech by Reserve Bank of Australia Governor Michele Bullock
• Tomorrow at 04:30 (GMT+3): Australian housing finance data
• Tomorrow at 15:30 (GMT+3): US core retail sales

Outlook

Overall, the inflation data enabled the US dollar to recover part of its recent losses but did not give markets sufficient impetus for a new sustained directional move. The trajectory of AUD/USD and USD/CAD will hinge on today's US producer-price and labour-market releases. Stronger-than-anticipated figures could underpin the US dollar and intensify pressure on commodity currencies, while softer data could rekindle expectations of a more dovish Fed stance and constrain the dollar's rebound.