Could July's ECB Rate Hike Curse Reappear and Cause Significant Euro Underperformance Until Year-end?

The month of July tends to bring confusing memories for ECB followers due to the respective 2008 and 2011 meetings. Both rate hikes announced back then were eventually seen as policy mistakes with the ECB quickly forced to subsequently ease monetary policy afterwards. Are there any similarities with the current ECB situation? What was the performance of euro-dollar after the July 2008 and 2011 events?

Preview of RBNZ: Steady as She Goes!

The August Monetary Policy Statement should be another "steady as she goes" affair. The RBNZ communicated a strong on-hold stance in the last Monetary Policy Statement in May and in the subsequent OCR review. The overall data flow would likely not have significantly shifted that stance in either direction.

Big Rise in Natural Gas Price

Natural gas: European natural gas prices rose as much as 40% yesterday - the biggest daily increase since last year. Both the day-ahead spot price and the one-month benchmark future jumped. The move higher came a bit out the blue. Some news headlines suggest it could be due to a tighter LNG market partly on the back of a labour strike in Australia.

All Eyes on US Inflation

US equities fell, while yields pushed higher in the run up to today’s most important US inflation data. Inflation in the U.S. is expected to have rebounded from 3 to 3.3% in July and core inflation may have steadied at around 4.8%.

AUD/USD Rebounds as Inflation Expections Dip

Australia’s consumer inflation expectations dipped in August to 4.9%, down from 5.3% in July. The good news? This marked the lowest level since April and supports the view that inflation has peaked. The bad news? Inflation expectations remain high and are well-embedded, which means that the downturn in inflation could be slow.

All Eyes on US CPI Report as Traders Weigh Up Whether Fed is Done With Rate Hikes

Whether that will last into the end of the session may ultimately depend on the US inflation report, which is released shortly before the opening bell on Wall Street. It will take something big for the Fed to consider hiking again you would think, having shifted to a more gradual approach in recent months.

Bitcoin and Ether Show Bears' Strength

On Wednesday, Bitcoin attempted to climb above $30K and was again pushed back by sellers. The decline in financial markets didn’t help Bitcoin this time, as risk-off sentiment was driven by global economic growth and losses in tech stocks.

XNGUSD: Natural Gas Price Hits 5-month High

The XNG price chart shows that the extremes of summer are forming an ascending channel, and its upper limit has not yet been reached. The ability of the bulls to gain a foothold above the psychological level of USD 3.0 will indicate the strength of demand.

US: Core Inflation Takes Another Step in the Right Direction in July 

The July CPI reading was another step in the right direction towards returning price stability. Core inflation matched June's 28-month low of a 'soft' 0.2% m/m gain, which pushed the three-month annualized change down to just 3.1% – its first 'three-handle' since September 2021. Importantly, goods prices have again become a source of deflation, while price growth across non-housing services has slowed from last year's peak of 6.7% to 4%.

Markets Cheer Softening US Inflation

Risk assets are pointing to a positive US open after the just-released July CPI report. The subdued core print is especially encouraging, as it raises hopes that further Fed rate hikes are now off the table. US stock futures and gold are up, while the US dollar is threatening to erase all of this week’s gains.