Support
Dollar rises post August's inflation report
The core CPI saw a slight uptick to 0.3% from 0.2% in July. Meanwhile he annual rate, slowed to 2.5%, down from 2.9% in July.
U.S. consumer prices rose 0.2% in August, while core CPI increased to 0.3%.
Odds of a 50bps rate cut dropped to 16%, while chances for a 25bps cut rose to 84%.
Nvidia surged 8%, leading a tech rally that helped the S&P 500 recover from early losses.
Currencies
The dollar strengthened after U.S. consumer inflation data dampened expectations of a significant interest rate cut by the Federal Reserve.
August’s consumer prices rose 0.2% on a monthly basis – the same as July’s monthly CPI, The core CPI saw a slight uptick to 0.3% from 0.2% in July. Meanwhile he annual rate, slowed to 2.5%, down from 2.9% in July.
The likelihood of a 50-basis point rate cut dropped to 16%, down from 34% the previous day. Meanwhile, the market is now factoring in an 84% chance of a 25-basis point cut at the September meeting, up from 66%.
The Japanese yen pulled back from its eight-month highs, with the USD/JPY pair rising 0.1% to 142.47. The yen's decline continued overnight after August’s PPI inflation came in lower than expected.
This softer inflation data has cast some doubt on how much room the Bank of Japan has to continue raising interest rates, especially after signaling plans to increase rates further this year in response to rising inflation.
Stocks
The S&P 500 trimmed its losses, with a tech rally driven by Nvidia offsetting a drop in expectations for a large interest rate cut by the Federal Reserve next week.
The S&P rebounded after an initial drop to 5,405, closing near 5490. NVIDIA Corporation surged over 8% following reports that the U.S. government is considering lifting a ban, potentially allowing the company to export advanced chips to Saudi Arabia, Nvidia's rally also boosted other chip stocks and lifted the broader tech sector.
