12/08/2026
Ahead of the release of U.S. July CPI inflation data, global markets show a cautious divergent pattern. Supported by uncertainties surrounding Middle East peace talks, crude oil prices have advanced, weighing on overall market risk sentiment. Meanwhile, Asian-Pacific tech stocks staged a standalone rebound driven by better-than-expected corporate earnings. Major asset classes including the U.S. dollar, U.S. Treasury bonds, gold and the Japanese yen traded in tight ranges, as market participants remained on the sidelines, awaiting the key inflation data to gauge the Federal Reserve’s next monetary policy moves.
1. Crude Oil: Escalating Geopolitical Tensions Drive Six Consecutive Gains
International crude oil prices extended their upward trend. The global benchmark Brent crude climbed 0.8% to settle at $89.60 per barrel, notching six straight trading days of gains. Fading market optimism over progress in Middle East peace negotiations has become a core supportive factor for oil prices.
Although Pakistan’s Defence Minister signalled that the U.S. and Iran are “on the verge of reaching an agreement”, both sides hardened their stances in the long-stalled negotiations over the Strait of Hormuz, with no meaningful de-escalation of geopolitical risks. Against this backdrop, commodity markets priced in heightened geopolitical risk premiums, pushing oil prices steadily higher and laying the groundwork for persistent energy-driven inflation pressures in the upcoming U.S. CPI release.
2. Asian-Pacific Equities: Tech Sector Leads Rally on Strong Earnings Catalysts
In contrast to the cautious sentiment in commodity markets, Asian-Pacific equities outperformed notably, with the technology sector acting as the primary growth driver. Robust earnings beats from multiple AI and server hardware firms significantly boosted risk appetite in the tech segment. CoreWeave Inc. saw its after-hours stock price surge 16%, fueled by a sharp rise in AI-related spending that propelled its revenue growth above market consensus. Super Micro Computer Inc. also gained 7.6% in after-hours trading after releasing stronger-than-expected revenue guidance.
Positive individual stock earnings lifted sector and broader market indices. The MSCI Asia Pacific Index edged up 0.4%, while the tech-heavy South Korean KOSPI Index outperformed sharply with a 2.8% gain. U.S. stock index futures traded narrowly with minimal volatility amid pre-data caution.
3. Market Sentiment: Investors Remain Cautious, Awaiting U.S. CPI Policy Guidance
Global risk sentiment stayed subdued as investors entered a wait-and-see mode ahead of the U.S. July CPI print, balancing lingering Middle East geopolitical risks and uncertainties over the Fed’s interest rate path. Market optimism over a breakthrough in Middle East negotiations previously buoyed risk assets but faded rapidly, steering markets back to rational pricing.
Market expectations point to easing energy-driven inflation pressures in the latest CPI reading. Energy inflation surged in prior months amid Iran-related tensions but has moderated recently. Economist surveys show a median forecast of a 0.1% month-on-month rise in U.S. July core CPI, marking a recovery from a 0.4% month-on-month decline in June.
A mild inflation rebound is expected to ease market concerns over Fed policy tightening. Three Federal Open Market Committee (FOMC) members voted against a rate hike at the July policy meeting, signalling a pause in tightening. An in-line or softer CPI reading will further anchor the Fed’s stance of holding interest rates steady.
4. Other Major Assets: G10 Currencies Strengthen Modestly, Gold and Treasuries Range-Bound
In the foreign exchange market, the U.S. dollar weakened moderately against most G10 currencies. The USD/JPY pair traded flat around 159.33, hovering near the critical 160 psychological level and triggering heightened expectations of intervention by Japanese authorities to curb further yen depreciation.
The fixed-income market remained stable. U.S. Treasury bonds steadied, with the benchmark 10-year Treasury yield little changed at 4.69%, reflecting broad market caution ahead of key economic data.
Gold prices staged a modest recovery, recouping part of Tuesday’s losses to trade near $4,390 per ounce, supported by lingering geopolitical risks and a softer U.S. dollar.
U.S. economic data released on Tuesday presented a mixed picture. The housing market remained sluggish, with elevated home prices and high mortgage rates continuing to weigh on activity, pushing existing home sales to a three-month low and highlighting weak housing recovery momentum.
5. U.S. Economic Fundamentals: Housing Market Under Pressure, Small Business Sentiment Improves
In contrast, U.S. small business sentiment improved notably, climbing to a nearly one-year high. The upturn was driven by accelerated corporate hiring plans and easing inflation pressures, demonstrating underlying resilience in the U.S. economy.
FXCG Outlook & Conclusion
Global markets are currently governed by a balanced dynamic: geopolitical risks underpin commodity prices, strong corporate earnings support equity markets, and pre-data uncertainty caps overall risk sentiment. The U.S. July CPI data stands as the near-term focal point, with its outcome set to shape the Fed’s interest rate trajectory and drive the medium-term trends of the U.S. dollar, U.S. equities and commodities. Additionally, developments in Middle East peace talks and potential Japanese forex intervention at the key USD/JPY 160 level remain critical wildcard factors to monitor.
[Disclaimer] Forex trading involves risk; please invest with caution. This content is for informational purposes and objective analysis only, and does not constitute any investment advice, basis for buying/selling, or guarantee of returns. Investors should make independent decisions based on their own financial situation and risk tolerance, and bear their own investment risks.
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