The preliminary Harmonized Index of Consumer Prices data for the Eurozone in August reached 3.3% on a year-on-year basis, exactly as anticipated by the market, rising above the previous reading of 2.9%. On a monthly basis, inflationary pressures accelerated at a pace of 0.4%, compared to the prior release of 0.2%.
Core HICP Moderates in August
The core HICP figure, which strips out volatile categories such as food, energy, alcohol, and tobacco, came in at 2.4% year-on-year. This reading is lower than both consensus estimates and the prior month's release of 2.5%. On a month-on-month basis, core HICP edged up by 0.2% following a flat performance through July.
Currency Markets and Global Yields
In the foreign exchange markets, the GBP/USD pair traded with mild losses below the 1.3550 mark during the European session. The US Dollar recovered some ground supported by ongoing Middle East tensions and hawkish expectations surrounding the Federal Reserve's interest rate outlook, weighing on the pair ahead of crucial US economic data releases.
Similarly, the EUR/USD pair struggled to build on its overnight bounce, trading below 1.1600 in the European session on Tuesday. Eurozone data confirmed that annual HICP inflation ticked up to 3.3% in August from 2.9% in July, matching market forecasts, while core HICP softened to 2.4%. Later in the day, the US economic calendar features the JOLTS Job Openings and ISM Manufacturing PMI figures.
Gold and Cryptocurrency Markets
Gold held onto modest intraday losses near the $4,430 region heading into the European session, remaining within striking distance of a one-and-a-half-week low touched the previous day. Comments from US Federal Reserve Chair Kevin Warsh reinforced market bets for an imminent interest rate hike, keeping the non-yielding yellow metal under pressure.
In the digital asset space, Ripple, Cardano, and Dogecoin remained weak following double-digit losses the prior week, actively testing their crucial Exponential Moving Averages for immediate support. Technical indicators warn of continued downside potential for XRP, ADA, and DOGE as bullish market momentum fades.
Energy Markets and Diesel Spreads
The global rise in bond yields continues unabated, driven by elevated oil and energy prices, tighter monetary policy expectations, and higher fiscal risk premia. Ongoing geopolitical tensions in the Middle East pushed oil prices back toward the $90 per barrel area, reinforcing a higher-for-longer inflation narrative.
While the broader crude market appears relatively calm, diesel is signaling a starkly different trend. The US diesel crack spread, representing the premium of ultra-low sulfur diesel futures over WTI, recently surged above $100 per barrel for the first time ever, hitting an intraday record high of just over $102.00.
