Headlines:
- UK June CPI +7.9% vs +8.2% y/y expected
- Sterling falls on softer UK inflation numbers
- UK bond yields sharply lower after inflation data earlier
- BOE watch: A 25 bps rate hike is now more favoured in August
- USD/JPY moves towards 140.00 as Ueda casts doubts on imminent policy tweak
- Aussie holds lower on softer Chinese yuan today
- Eurozone June final CPI +5.5% vs +5.5% y/y prelim
- US MBA mortgage applications w.e. 14 July +1.1% vs +0.9% prior
Markets:
- USD leads, GBP lags on the day
- European equities higher; S&P 500 futures flat
- US 10-year yields down 2.9 bps to 3.760%
- Gold down 0.3% to $1,973.18
- WTI crude up 0.2% to $75.88
- Bitcoin up 0.8% to $30,018
UK inflation was the highlight of the session and it didn't disappoint, or at least unless you are a sterling bull. The numbers pointed to an easing in price pressures for June, which sent the pound and UK yields lower on the day.
Markets worked to reprice the more hawkish BOE rate outlook, with a 25 bps rate hike now preferred over a 50 bps move for August. GBP/USD fell sharply from 1.3030 to 1.2905 and is holding near the lows now, with a firmer dollar also helping to keep the downside pressure on the pair.
There were several other decent movers on the session but they all owed much to separate factors.
USD/JPY pushed higher towards 140.00 from around 139.30, helped by the more dovish remarks by BOJ governor Ueda from yesterday. Meanwhile, the antipodean currencies are marked lower due to a softer Chinese yuan on the day. AUD/USD is down 0.7% to 0.6765 after having seen USD/CNY push up from 7.18 to near 7.22 in trading today.
In other markets, equities kept steadier across the board after the gains from yesterday while bond yields are generally lower - with UK yields leading the downside push after the softer inflation numbers.