Market Overview

The U.S. dollar remained largely steady on Tuesday, with the US Dollar Index quoted at 99.84 by 03:08 ET (07:08 GMT), unchanged after a 0.3% rise in the prior session. Investors were focused on the upcoming U.S. consumer price index (CPI) release for clues on the Federal Reserve’s interest‑rate trajectory.

US Dollar and CPI Outlook

July U.S. payrolls had unexpectedly fallen by 23,000 jobs, well below the consensus forecast of an 80,000 increase, prompting a modest pull‑back of long‑dollar positions. Despite the payroll miss, market participants still expected at least one Fed rate hike this year. Attention turned to Wednesday’s CPI data, followed by producer‑price and retail‑sales figures, as the primary gauges of whether inflation is cooling sufficiently to alter the Fed’s policy outlook.

Japanese Yen

The USD/JPY pair hovered around 159.30 yen after a 1% jump in the previous session. The yen surrendered nearly half of the gains generated by a joint U.S.–Japan intervention that had lifted it from a 40‑year low of 163.99. Japanese markets were closed for a holiday, resulting in thinner trading volumes.

Australian Dollar and RBA Decision

The Reserve Bank of Australia (RBA) left its cash rate unchanged at 4.35% on Tuesday, extending a pause while weighing persistent inflation against signs of weaker economic activity. The central bank had raised rates three times this year to curb inflation, which, although easing to 3.8% in June, remained above the 2%‑3% target band. The decision followed second‑quarter underlying inflation coming in below forecasts, reducing immediate pressure for another hike. The RBA stated that the Board would continue to act as necessary to bring inflation sustainably back to target, including raising the cash‑rate target further if upside risks materialise. The Australian dollar’s AUD/USD pair traded largely flat.

Oil Prices and Asian Currency Impact

Crude oil (LCO) rose 1.81%, a move that could complicate the outlook for Asian currencies by reviving inflation concerns in energy‑importing economies, especially as hopes for a U.S.–Iran agreement faded.

Geopolitical Note

President Donald Trump indicated on Monday that he would seek compensation from Iran as part of any peace agreement, while Tehran demanded reparations and other concessions, underscoring the challenges facing the negotiations.