Forexlive Americas FX news wrap: CPI cools, Japan intervenes

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Markets:

• Gold
  up
  $43
  to
  $2441
• WTI
  crude
  up
  91-cents
  to
  $83.02
• US
  10-year
  yields
  down
  7.6
  bps
  to
  4.20%
• S&P
  500
  down
  0.8%,
  Nasdaq
  down
  2.1%
• JPY
  leads,
  CAD
  and
  USD
  lag

It
was
a
strange
day
in
the
market.

The
news
was
straight-forward
with
CPI
unambiguously
weak.
All
the
numbers
were
below-estimate,
putting
another
nail
into
the
coffin
of
the
inflation
fight.
The
initial
reaction
is
what
you
would
expect
with
the
market
pricing
in
61
bps
in
Fed
easing
by
year
end,
up
from
49
pre-data.
The
dollar
fell,
stock
futures
rose
and
Treasury
yields
sank.

That
didn’t
last.
For
one,
Japan
may
have
unveiled
a
new
intervention
strategy
to
go
along
with
a
new
top
currency
official
announced
in
late
June.
They
tried
to
ride
the
wave
of
USD
selling
post-CPI
to
hammer
USD/JPY.
They
were
successful,
knocking
it
more
than
300
pips
lower
as
the
dollar
fell
around
40
pips
elsewhere.

The
dip
was
partially
bought
by
confirmation
of
the
intervention
and
we
will
have
to
wait
until
the
end
of
the
month
to
find
out
how
much
they
spent.
For
now,
this
might
keep
USD/JPY
spec
longs
sidelined
into
the
next
major
round
of
economic
data.

Aside
from
JPY,
the
dollar
move
was
moderate
with
EUR/USD
rising
to
1.09
from
1.0850
only
to
slowly
give
back
most
of
the
move.
Cable
made
more
headway,
climbing
80
pips
on
the
CPI
headlines
to
1.2950
before
sagging
back
to
1.2912.

Some
of
the
giveback
moved
with
bonds
as
yields
ticked
up
from
the
lows,
particularly
after
a
soft
30-year
reopening
auction.
The
bigger
driver
was
risk
aversion
though
as
high-flying
Nasdaq
stocks
were
cut
down
including
a
5.6%
fall
in
NVDA
and
am
8.4%
drop
in
TSLA
among
others.
Where
it
got
strange
was
in
the
Russell
2000,
which
gained
3.6%
in
a
huge
divergence.
Real
estate
and
regional
banks
absolutely
soared.

I
wonder
how
much
of
that
move
was
hedges
and
shorts
taken
off
rather
than
true
rotation.
It
looks
to
me
like
a
capitulation
on
inflation
trades/hedges
but
it
also
comes
after
an
extended
run
in
megacap
and
AI
stocks,
including
something
of
a
mysterious
and
strong
rally
yesterday.

So
for
all
the
fresh
clarity
in
the
macro
picture,
it’s
harder
to
find
in
markets.
Also
don’t
forget
that
in
the
prior
two
soft
CPI
reports,
the
bond
market
ultimately
gave
back
the
big
kneejerk
moves.