Markets Rally on Mild US CPI; Wall Street Hits Records, ETH near ATH

The euro advanced against the US dollar on Tuesday, gaining more than 0.50% after the release of mixed US inflation data and fresh criticism of the Federal Reserve from President Donald Trump.

July’s US Consumer Price Index showed a flat headline figure, but the core reading came in hotter than expected. Despite the stronger core data, market expectations for a September interest rate cut remain firmly in place, with futures pricing in a probability above 90%.

Trump renewed his attacks on Fed Chair Jerome Powell, accusing him of being “too late” in delivering rate cuts. The president also threatened legal action against Powell over renovation work at the Fed’s headquarters.

Several Federal Reserve officials spoke following the data release. Kansas City Fed President Jeffrey Schmid struck a hawkish tone, while Richmond Fed President Thomas Barkin maintained a more neutral stance. On CNBC, Trump’s nominee for the Fed board, Stephen Miran, emphasized the importance of central bank independence but declined to comment further, noting his appointment still awaits Senate approval.

In Europe, sentiment data showed a marked decline in investor confidence. The August ZEW Survey of Expectations for the euro area dropped from 36.1 to 25.1, while Germany’s ZEW Economic Sentiment index plunged from 52.7 to 34.7, well below expectations of 39.8. Looking ahead, Wednesday’s economic calendar will be active on both sides of the Atlantic. In the US, Fed officials including Barkin, Austan Goolsbee, and Raphael Bostic are scheduled to speak. In Europe, attention will turn to German and Spanish CPI releases.

Gold prices inched higher on Tuesday as mixed US inflation data reinforced expectations for Federal Reserve interest rate cuts, while traders looked ahead to a series of key economic releases later this week.

Gold was supported by a softer US dollar, which made bullion more affordable for holders of other currencies. This followed Monday's losses when President Donald Trump announced he would not impose tariffs on imported bullion. That statement followed a report late last week that Washington had applied tariffs to 1 kg bullion bar imports, briefly sending futures to record highs.

July’s US Consumer Price Index rose 0.2%, in line with expectations, following a 0.3% increase in June. On an annual basis, CPI advanced 2.7%, slightly below the 2.8% forecast. Traders remain cautious as we’re at a critical point and awaiting further economic indicators.

Markets are still pricing in rate cuts in both September and December, with attention now turning to upcoming US Producer Price Index data, weekly jobless claims, and retail sales. Meanwhile, the United States and China extended their tariff truce for 90 days, averting steep new duties on each other’s goods.

Analysts noted that gold remains range bound as investors weigh the inflation outlook against trade policy developments. Lower interest rates generally enhance the appeal of non-yielding bullion, which is also sought after in times of economic or geopolitical uncertainty.

Oil prices fell on Tuesday as traders awaited US inventory data and looked ahead to a seasonal slowdown in fuel demand with the end of the summer driving period in early September.

July’s US Consumer Price Index showed the strongest core inflation gain in six months, driven in part by tariff-related increases in import costs. Market participants are awaiting supply data from the Energy Information Administration on Wednesday, which could reveal signs of declining demand.

OPEC’s monthly report projected global oil demand to grow by 1.38 million barrels per day in 2026, an upward revision of 100,000 bpd from its previous estimate, while its 2025 outlook remained unchanged. The US Energy Information Administration forecast that domestic crude production will peak at a record 13.41 million bpd in 2025 before slipping to 13.28 million bpd in 2026 — the first annual decline since 2021 — due to weaker prices. The EIA also lowered its 2025 Brent price forecast to $51 a barrel from $58 following OPEC’s decision to accelerate production increases.

Trade developments also influenced sentiment. President Donald Trump extended the US–China tariff truce to November 10, averting steep duties on Chinese imports ahead of the holiday retail season. Additionally, Trump is scheduled to meet Russian President Vladimir Putin in Alaska on Friday to discuss a potential resolution to the war in Ukraine.

The US 500 and US Tech 100 closed at record highs on Tuesday as softer-than-expected US consumer price data bolstered expectations for a Federal Reserve interest rate cut in September.

Following a weak July employment report and downward revisions to prior months, markets are now pricing in around a 90% chance of a 25 basis-point cut at the Fed’s September meeting.

The inflation reading could ease concerns among some Fed policymakers that President Donald Trump’s tariff policies risk driving consumer prices higher.

In Washington, Trump nominated economist E.J. Antoni to lead the Bureau of Labor Statistics after firing former head Erika McEntarfer, whom he accused—without evidence—of manipulating data to harm him politically.

In corporate news, Alphabet shares rose over 1% after reports that AI startup Perplexity AI, valued at $18 billion in July, had made a $34.5 billion offer for Google’s Chrome browser.

Tencent Music gained after posting stronger-than-expected second-quarter results, while Intel climbed more than 5% after Trump praised CEO Lip-Bu Tan following a recent meeting, despite previously calling for his ouster over national security concerns.