North American FX Open - Dollar under pressure heading into US CPI release

It looks like Dollar traders suspect that a downside miss in the US CPI report for June released today, will have a greater impact, as the US unit has come under pressure overnight. With the market seemingly having moved on from the French political concerns, Eur/Usd has been able to ascend to 1.0853, its highest level since June 7th. Aud/Usd has extended its six month highs to 0.6764, while a much better than expected UK growth update has helped propel Cable to 1.2882, which is a four month high.

Overnight the Fed's Cook stated that so far US data seems consistent with a soft landing and that she expects more disinflation without much of a rise in unemployment.

UK growth for May came in at 0.4%, double the 0.2% consensus forecast. Over the first five months of the year, UK output is up 1.5%, the best five month expansion, outside of the post Covid rebound, since April 2017. After the still hawkish rhetoric from MPCers Haskel, Pill and Mann so far this week, the data was another blow to hopes for a first BoE rate cut in August.

Earlier the UK, the June RICS house price balance missed expectations, staying at -17, but the professional body added British home sales will probably rebound as buyers draw more confidence that interest rates will fall and the uncertainties of last week's general election pass.

Overnight in Australia, the CBA Household Spending survey for June rose by another healthy clip of 0.6% m/m and 3.9% y/y.

Meanwhile the Melbourne Institute one year inflation expectations survey eased back to 4.3% in July from the 4.4% level in June. US CPI for June is seen at 0.1% m/m and 3.1% y/y vs 0.0% and 3.3% the month previous, while the core rate is expected to come in again at up 0.2% m/m and up 3.4% y/y.

Question marks over whether President Biden will run in November continue as once again the press report that he is facing mounting opposition from within his own Democratic party. Vermont Democrat Welch became the first sitting senator to directly endorse replacing the 81-year-old president whose disastrous debate performance has raised concerns about his mental acuity and thrown his re-election bid into tumult. And, Axios reported majority leader of the US Senate Chuck Schumer privately signaled to donors he is open to replacing Biden as the nominee, while Governor of Michigan Gretchen Whitmer told CNN 'it wouldn't hurt' for him to take a cognitive test.

Predictit now have Trump at a 61% probability to win the race, his highest ever. Meanwhile Biden has a 20% probability to win, his lowest on record. The "other" option is on 19% probability to win and looks set to overtake Biden soon.

US CPI for June is seen at 0.1% m/m and 3.1% y/y vs 0.0% and 3.3% the month previous, while the core rate is expected to come in again at up 0.2% m/m and up 3.4% y/y. US jobless claims are also set for release.

The scheduled Fed speakers for today are Bostic and Musalem.

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