Dollar steady as soft inflation eases rate concerns
Treasuries pared gains as US inflation printed broadly in line, tempering the case for an imminent Fed move.
Headline CPI held to expectations while core CPI eased to its slowest annual pace since March 2021, pulling the odds of a September hike back to roughly 40% from a coin-flip earlier in the week. US 2-year yields eased ~1bp to 4.20%, the curve bull-steepened modestly, and the long end sold off into the close with 30-year yields ~2bp higher at 5.26%. Equities shrugged off the early wobble to close marginally firmer, led by a wave of AI-linked earnings beats, while a notable order tightened around Middle East shipping risk after reports of fresh strikes on Black Sea export infrastructure.
Closer to home, ACGBs firmed modestly overnight with the front end outperforming, while SPI futures point to a softer open on spillover from Middle East headlines. An RBA fireside chat is scheduled for today.
In Asia, regional equities were mixed into the close — Japan and China higher, Korea sharply firmer, Hong Kong lower. Liquidity settings in China are being eased further via a new mid-month funding tool, while India’s CPI ticked up on base effects, still broadly in line with consensus.
In FX, AUD/USD was flat, while NZD/USD was down 0.3%.
In Asia, USD/SGD and USD/CNH were little changed.
China’s tourism recovery hits new milestone
China’s inbound tourism topped pre-pandemic levels for the first time last year, welcoming about 35 million foreign visitors, according to Bloomberg citing National Bureau of Statistics data. The rebound has strengthened China’s position as one of Asia’s leading travel destinations, with arrivals surpassing Thailand and moving closer to levels seen in Japan and Malaysia. Visa-free travel has been a key driver, accounting for more than 70% of arrivals in 2025, up from 50% in 2024. However, stronger visitor numbers have yet to translate into higher tourism revenue, as spending per traveller remains below many regional peers.
USD/CNH remains near a three-year low. A break above the 21-day EMA at 6.7576 could open the door towards the 50-day EMA at 6.7739. On the downside, psychological support stands at 6.7400.
NZD/USD finds resistance at 0.5900 ahead of RBNZ inflation reading
The NZD/USD has struggled at the two-month highs around 0.5900 all week. Today’s inflation expectations reading will be key.
The Reserve Bank of New Zealand’s two-year inflation expectations reading climbed from 2.06% in March 2025 to 2.53% in June 2026. Today’s figure is due at 3.00pm NZST.
We will be closely watching this result for signals on whether the RBNZ might need to hike further after raising rates at its 8 July meeting. Currently, financial markets see a 91% chance of a hike at its upcoming September meeting (source: Bloomberg).
With expectations for further hikes already high, the near-term risk is a broadly steady inflation reading that could cause NZD/USD to weaken from the key resistance level at 0.5900.
To the downside, key support is seen at 0.5835.
USD index above 100
Table: Currency trends, trading ranges & technical indicators
Key global risk events
Calendar: 9 – 15 August
All times are in AEST
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
