Good morning. The largest single-day percentage gain in U.S. stock market history happened on March 15, 1933, when the Dow jumped 15.34% during the Great Depression.

Proof that even in the worst markets, massive green days can appear out of nowhere.

-Shaun A, Jonathan Kibbler, Pat Lewis

MARKETS

Prices supplied by Google Finance as of 4:00am ET - stock prices as of close. Here is what the prices mean.

TRADER INSIGHTS

U.S. inflation came in exactly where economists expected for June and somehow, that’s not the good news you’d think. Headline CPI rose 0.3% on the month, putting annual inflation at 2.7%, the highest since February. Core CPI, which strips out food and energy, ticked up just 0.2%, slightly softer than expected.

The Bureau of Labor Statistics data shows headline inflation climbing 0.3% in June and 2.7% YoY, hitting its highest level since February. Core inflation eased slightly at 0.2% MoM, but annual trends remain uncomfortably above the Fed’s 2% target. Translation: this isn’t the kind of “in-line” print that brings relief.

Analysts, including Ebury’s Matthew Ryan, are pointing fingers at Trump’s tariffs as a key driver of higher consumer prices. With more duties scheduled for August, inflation risks aren’t going away. For traders, this means the Fed can’t turn dovish too fast, even as growth jitters mount.

Markets were hoping for a data miss to revive hopes of a September rate cut. Instead, the CPI print keeps the Fed on the sidelines. Traders still price in about 60% odds for a cut this year, but Powell’s “meeting-by-meeting” mantra means one thing: CPI just told the Fed there’s no rush.

Stocks dipped on the news, and while the Dollar didn’t rip higher, it held its ground as yields stayed elevated. For us FX traders, USD remains supported, especially against currencies like JPY and EUR, as long as inflation refuses to cool meaningfully. And as for Commodities, Gold’s upside is capped for now unless the macro tide shifts.

The inflation story isn’t over. PPI lands tomorrow, and any upside surprise there will only reinforce the “sticky prices” theme. Plus, Trump’s tariff headlines aren’t slowing down, and that adds fuel to inflation fears. Pair that with the upcoming FOMC meeting, and you’ve got plenty of volatility ahead.

Inflation didn’t shock, but it didn’t soothe either. June CPI confirmed what markets feared: tariffs are biting, prices aren’t rolling over, and the Fed isn’t cutting anytime soon. For now, the path of least resistance is more range-bound chop with the Dollar holding firm and risk assets walking on eggshells.

-Shaun A

FOREX

The USD's strength looks to be building, this could have a big impact on the major currencies including EUR/USD, which looks to be pulling back to major support levels. Sentiment indicators like the commitment of trader reports highlight heavy long positioning by the non commercials. 

USD bears have been slowly fading over the past couple of weeks, with the USD Index climbing from 96.70’s back towards the 98.50’s. 

The USD CPI report today showed a slight cooling of inflation but headline came in above previous and expectations of 2.7%, whilst core came in at 2.9%. 

To me this seems like the inflation is sticky, and the Fed may have to be a bit more cautious when it comes to their policy outlook.

Trump on the other hand saw this as an opportunity to call for the Federal Reserve to cut interest rates. On Truth Social the President wrote “Consumer Prices LOW. Bring down the Fed Rate, NOW!!!”. 

The CME Fed Watch Tool shows the chances of a rate cut in September fading substantially. 

The Commitment of Trader (CoT) report shows that the non-commercial traders are the most bullish they have been on EUR futures in 52 weeks. 

When looking at the chart of EUR futures (EUR/USD) and the positioning, I can see that the last time the contracts were this high was back in January 2024. 

I always take positioning into consideration especially when they look stretched. It can often signal a reversal is going to form at some point. This helps me with account management or trading opportunities. 
The only problem we have is, we have no idea how deep the turn around could be or if the overall weekly trend would continue. But that’s trading for you! 

Although the price has found resistance towards the 1.1800 level, and the price seems to be heading lower. 

If this continues in line with the USD strength and EUR positioning, then we may see the price trade back towards the 1.1500 - 1.1450 level of support. A break of this level would highlight the market sentiment shifting for a longer period of time. 

The euro’s bullish run may be out of steam:

Good luck out there traders! 

-Jonathan Kibbler

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