Markets were a mixed bag on Tuesday as inflation data, trade headlines, and adjusted central bank expectations stirred volatility across assets.

Traders juggled soft Chinese retail numbers, a hotter-than-expected U.S. CPI, and Trump’s latest tariff moves while trying to make sense of where risk appetite was heading next.

Here are headlines you may have missed in the last trading sessions!

Headlines:

• Australia Westpac consumer confidence index for July: 0.6% m/m 93.1 (93.0 forecast; 92.6 previous)
• Nvidia will restart sales of a key AI chip to China, in a reversal of US restrictions
• China data dump
  • China GDP for June 30: 1.1% q/q (1.1% q/q forecast; 1.2% q/q previous); 5.2% y/y (5.3% y/y forecast; 5.4% y/y previous)
  • China unemployment rate for June: 5.0% (5.1% forecast; 5.0% previous)
  • China industrial production for June: 6.8% y/y (5.5% y/y forecast; 5.8% y/y previous)
  • China retail sales for June: 4.8% y/y (6.1% y/y forecast; 6.4% y/y previous)
  • China fixed asset investment (YTD) for June: 2.8% y/y (4.5% y/y forecast; 3.7% y/y previous)
  • China industrial capacity utilization for June 30: 74.0% (74.4% forecast; 74.1% previous)
• Germany ZEW economic sentiment index for July: 52.7 (49.1 forecast; 47.5 previous)
• Euro Area ZEW economic sentiment index for July: 36.1 (30.0 forecast; 35.3 previous)
• Euro Area industrial production for May: 1.7% m/m (0.8% m/m forecast; -2.4% m/m previous); 3.7% y/y (1.0% y/y forecast; 0.8% y/y previous)
• BOE member Mann said inflation is “still a challenge” above their target 2%
• U.S. CPI for June: 2.7% y/y (2.6% y/y forecast; 2.4% y/y previous); 0.3% m/m (0.3% m/m forecast; 0.1% m/m previous)
  • Core CPI at 0.2% m/m (0.2% m/m forecast; 0.1% m/m previous); 2.9% y/y (2.9% y/y forecast; 2.8% y/y previous)
• USD Higher As Upbeat June CPI Dampened Fed Rate Cut Hopes
• Canada CPI for June: 1.9% y/y (1.5% y/y forecast; 1.7% y/y previous); 0.1% m/m (-0.3% m/m forecast; 0.6% m/m previous)
• Canadian Dollar Rebounds as Traders Focus on Sticky Core Inflation
• Canada manufacturing sales final for May: -0.9% m/m (-1.3% m/m forecast; -2.8% m/m previous)
• U.S. NY Empire State manufacturing index for July: 5.5 (-13.0 forecast; -16.0 previous)
• U.S. President Trump announced a trade agreement with Indonesia, including a 19% tariff
• FOMC member Collins said “solid” economic conditions give the Fed time to assess incoming data
• U.S. has launched an investigation into Brazil’s “unfair” trading practices amid the country’s prosecution of former President Bolsonaro

Broad Market Price Action:

Dollar Index, Gold, S&P 500, Oil, U.S. 10-yr Yield, Bitcoin Overlay Chart by TradingView

Tuesday was a tough day for risk assets, with inflation jitters and tariff talks putting a lid on risk-taking. European stocks slid across the board. The Stoxx 600 lost 0.37%, Germany’s DAX slipped 0.42%, and France’s CAC 40 fell 0.54%. The FTSE 100 was hit the hardest, down 0.66%, dragged lower by homebuilders and retailers.

Over in the US, the action was mixed. The CPI print came in as expected, which gave stocks a brief boost. The Nasdaq managed to inch up 0.18% to a new record high at 20,677.80, thanks in part to a 4% jump in Nvidia after it resumed chip sales to China. But the S&P 500 gave back 0.40% to close below 6,300, and the Dow took a bigger hit, falling 0.98% as bank earnings weighed on the financials.

Gold dropped 0.65% to $3,325, backing away from the $3,350 ceiling as the dollar firmed up. The 10-year Treasury yield popped higher to 4.49%, the highest in more than a month, as traders dialed back their Fed cut hopes. WTI crude oil slipped to $66.52, still feeling the pressure from Trump’s 50-day Russia peace deal deadline. Bitcoin also got hit, tumbling to $117,600 after touching record highs on Monday.

FX Market Behavior: U.S. Dollar vs. Majors:

Overlay of USD vs. Majors Chart by TradingView

The dollar started Tuesday on the back foot, drifting lower during the Asian session as traders stayed cautious ahead of the US CPI report. The Greenback slipped against most majors, weighed down in part by China’s mixed data dump. Q2 GDP topped forecasts at 1.1% q/q, but June retail sales came in soft, stirring fresh worries about global growth and keeping pressure on the dollar early on.

Dollar selling picked up in Europe after Germany’s ZEW sentiment index jumped to 52.7 and the broader Euro Area gauge also surprised to the upside, giving the euro a lift. However, the Greenback staged a sharp reversal at the U.S. open (the trading session, not the tennis tournament) when CPI data landed right in line with expectations. Core inflation also only rose 0.2% m/m, suggesting tariffs haven’t really pushed prices higher just yet. That was enough to knock down September Fed cut calls and send the dollar flying off its lows.

Up north, Canada’s CPI came in as expected at 1.9% y/y, which didn’t do much for USD/CAD. What did move the needle was Trump’s announcement of a trade deal concept with Indonesia, which included a 19% tariff agreement. That added to the dollar’s rebound as traders welcomed any hint of trade progress. His calls for a 3-point Fed rate cut were largely dismissed by traders. By session close, the dollar had erased earlier losses to finish higher against most G10 currencies, extending its winning streak to seven consecutive sessions.

Upcoming Potential Catalysts on the Economic Calendar

• U.K. retail price index for June at 6:00 am GMT
• U.K. consumer price index growth rate for June at 6:00 am GMT
• Euro Area trade balance for May at 9:00 am GMT
• Canada housing starts for June at 12:15 pm GMT
• U.S. producer price index for June at 12:30 pm GMT
• U.S. industrial production for June at 1:15 pm GMT
• U.S. manufacturing production for June at 1:15 pm GMT
• U.S. capacity utilization rate for June at 1:15 pm GMT
• U.S. Fed Barr speech at 2:00 pm GMT
• U.S. EIA crude oil stocks change for July 11 at 2:30 pm GMT
• U.S. Fed Beige Book at 6:00 pm GMT
• U.S. Fed Williams speech at 10:30 pm GMT
• New Zealand food price index for June at 10:45 pm GMT
• Japan balance of trade for June at 11:50 pm GMT

Today’s U.K. inflation data will likely drive early GBP volatility, while the U.S. PPI report may be the day’s main event for USD pairs.

On top of that, Fed speakers Barr (2:00 pm) and Williams (10:30 pm), plus the Beige Book report (6:00 pm), could amplify or reverse any USD moves depending on their tone regarding future rate cuts.

As always, stay nimble and don’t forget to check out our Forex Correlation Calculator when taking any trades!