The core US CPI index for July is expected to come in at 2.5% year on year, a low level, strengthening expectations that the Federal Reserve will leave rates unchanged, while the US Treasury is conducting a 10-year note auction today. The market will focus on the CPI release and the auction results.
Ahead of the US CPI release, which is expected to drive activity in the New York foreign exchange market, views are emerging that core CPI will be held to around 2.5% year on year, a low level. This is strengthening expectations that the Federal Reserve will have firmer grounds for leaving its policy rate unchanged. The effects of tariffs that drove inflation last year have also run their course, and forecasts are emerging that prices for clothing and household appliances will continue to decline.
Meanwhile, the US Treasury is conducting a 10-year note auction. The auction is expected to total $42 billion, and attention is focused on developments in the US Treasury market following the results. Crude oil prices remain elevated at around $83.70, which could help support the dollar.