[MARKET ANALYSIS] DXY takes a breather after recent advances, while the attention turns to US CPI

DXY: Flat

• Takes a breather after strengthening yesterday as yields climbed to multi-year highs alongside a surge in oil prices owing to the geopolitical escalation in the Middle East between Saudi Arabia and Iran-backed Houthis, which increases the threat to shipping in the Bab al-Mandab Strait. In terms of recent data, PPI was mixed and therefore puts the onus on today's CPI report to influence the Fed decision next week, while Initial and Continuing Claims were little changed W/W.

EUR/USD: Flat

• Trades little changed overnight after having recently weakened against the buck despite the ECB's decision to hike rates by 25bps, which was widely expected and the statement refrained from any clear forward guidance, but noted inflation will remain well above target for an extended period. Furthermore, there was a later source report that ECB governors think further policy tightening is likely and may debate another hike as soon as October, although it was stated that market expectations for three more hikes may be overly optimistic and December may be a more opportune time to raise borrowing costs.

GBP/USD: Flat

• Lacks demand and retests the 1.3500 handle, while participants look ahead to incoming data including monthly GDP.

USD/JPY: +0.1%

• Remains afloat after climbing above 154.00 alongside the rise in US yields and surge in oil prices.

Antipodeans: AUD/USD +0.1% / NZD/USD +0.4%

• Nursed some losses with little fresh overnight catalysts, while there was a hawkish call from Citi, which now sees two more RBA rate hikes this year to lift the Cash Rate to 4.85%.