The dollar index fell by -0.28% today, increasing the chances of a Fed rate cut in September to 96% after the US CPI report. July’s CPI was +0.2% m/m, with year-on-year figures at +2.7% for headline CPI and +3.1% for core CPI. The 10-year T-note yield rose +2.5 bp on concerns about Trump’s attack on Fed Chair Powell.

President Trump extended the tariff truce with China for 90 days and announced a 100% tariff on semiconductor imports. Tariffs on US imports from India will double to 50%, while pharmaceutical import tariffs are forthcoming. Average US tariff rates may rise to 15.2% if implemented.

Federal funds futures prices predict a -25 bp rate cut with 96% certainty in September. EUR/USD is up by +0.23% due to dollar weakness, but concerns remain about US tariffs on the European economy. Swaps indicate a 5% chance of a -25 bp rate cut by the ECB in September.

USD/JPY is up +0.14% on dollar weakness, reflecting concerns about US tariff policies affecting the Japanese economy. Precious metals prices declined after the CPI report met market expectations. Gold prices eased after Trump stated that gold imports will not face tariffs.

Despite the CPI report, precious metals have support from increased chances of a Fed rate cut and geopolitical risks. Fund buying of precious metals continues to support prices, with gold ETF holdings at a two-year high and silver ETF holdings at a three-year high.

Read more at Yahoo Finance: Dollar Trades Lower as CPI Report Boosts Chances of a Fed Rate Cut