USD

Another large spike in US inflation saw the US Dollar strengthen on Tuesday. US consumer prices rose in June by 0.9% (expected +0.5%) with year on year rising 5.4% rise (expected+4.9%), despite this, global stocks/indices only saw moderate falls. However, investors are likely to remain cautious as there is now a potential case for earlier interest rate rises than the Federal Reserve have so far indicated, should of course inflation continue to rise again in the coming months. The latest producer prices (PPI) are released at 1.30.pm.

GBP
This morning’s release of UK headline consumer prices also confirms a rise above consensus, year on year came in at +2.5% (expected 2.2%), month on month for June rose 0.5% (expected +0.2%). Producer prices however showed the reverse, June input -0.1% (expected +1.2%). Having finally closed in Europe yesterday above EUR 1.1700, early buyers returned today on the data release having traded at a high of EUR 1.1740 earlier. Sterling opened today against the generally firmer Dollar at 1.3835, down 50 cents from yesterday’s highs.

EUR
As German consumer prices for June came in flat, the Euro drifted lower on Tuesday, finally breaking back below the pivotal 1.1850 level on the US inflation spike and extending its losses by the close of day. During the Asian session 1.1772 traded (nearly weekly lows).