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US CPI inflation fell to 8.5% in July from 9.1%, stronger than expectations. The key factor in the inflation report, however, is that core inflation remained unchanged at 5.9% y/y and there was no change in monthly inflation, with a previous increase of more than 1%.
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The lower-than-expected inflation reading helped the valuations of equity markets, which mostly posted gains today. Germany's DAX gained 1.23%, and France's CAC 40 rose 0.52%. On Wall Street, the NASDAQ and the RUSSELL 2000 are the best performing indices, posting gains of more than 2%.
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In the currency market today, we see broad weakness in the US dollar against other currencies. It is losing more than 2% against the JPY or NZD, which is unusual in the currency market.
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It is worth noting, however, that we are not seeing any change in the attitude of Fed members. Evans, known for his dovish stance, sees as much as 3.5% this year and 4% by the end of next year. The market, however, is no longer giving a 75bp hike a chance in September, although a lot can still change by then.
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Crude oil stocks rose by almost 5.5 million barrels, but gasoline stocks fell by 5 million. The data show a massive implied increase in fuel demand and at the same time a sizable oil throughput. The data remain highly volatile since the EIA had a week-long data collection problem. Oil is finally rebounding after initial declines. Prices are up about 1.5%. Gains are basically observed across the entire commodities market, thanks to a very weak dollar.
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Very good sentiment in the stock market also extended to cryptocurrencies. Bitcoin is currently gaining 3% and trying to break out above the $24,000 barrier. Ethereum is gaining more than 7.5% and has broken out above the $1,800 level.
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