How The Day Played Out
US equity markets moved higher on Thursday, with the S&P 500 hitting a new record high as both CPI and PPI inflation data for July came in somewhat cooler than expected. The driver of the morning session was the data tape, which arrived at 13:30 UK time and landed in a manner that extended Wednesday's disinflation narrative rather than reversing it.
The headline Producer Price Index posted a flat 0.0% in July, following June's unrevised -0.3% drop. In the last 12 months, headline wholesale inflation increased 4.7%, below the consensus for 4.9% and June's unrevised 5.5% reading. Core PPI, which strips out volatile food and energy costs, rose 0.2% in July, below economists' 0.3% consensus forecast. That is a clean double miss on the headline and a softer core. Back-to-back benign inflation prints from CPI and PPI in the same week are not a coincidence. They are a pattern, and the market treated them accordingly.
Initial jobless claims increased to 209,000, above the 202,000 economists had expected. The combination of moderating producer prices and a slightly weaker labour market reading has strengthened expectations that the Federal Reserve may have less reason to tighten monetary policy in the near term. According to CME FedWatch, the probability of the Fed raising rates at the September 16 FOMC meeting has fallen to about 34%, from around 55% last week.
Treasury two-year yields, which are more sensitive to imminent Fed moves, dropped six basis points to 4.14%. Money markets priced in about a 35% chance of a September Fed hike. That is a meaningful compression of rate risk in 48 hours, and it shows up across the instruments this briefing covers.
Before the New York tape opened, the London session had already processed the UK GDP print. UK Q2 preliminary GDP came in at +0.4% quarter-on-quarter, matching expectations exactly, against a prior reading of +0.6%. In output terms, growth was mainly driven by an increase of 0.5% in the services sector. The construction sector increased by 0.3%, while production output showed no growth. Analysts noted it was not one to change the BoE outlook whatsoever, which is the most telling assessment. A print that exactly matches consensus and arrives alongside contracting industrial production neither confirms nor disrupts. GBP reacted accordingly, with minimal directional conviction.
The geopolitical backdrop sharpened its rhetoric during Thursday's session and constitutes the most significant late development to flag. Iran's military rejected US claims that vessels are passing through the Strait of Hormuz, saying no ship can pass without its permission. The commander of the Basij paramilitary said the waterway is "under Iran's control." Following President Trump's claim Wednesday that the US has "total control over the Strait of Hormuz," Iranian Foreign Minister Abbas Araghchi said the president "has long miscalculated due to intelligence failures." The Persian Gulf Strait Authority stated "the Strait of Hormuz remains blocked and will not be reopened until Iran's conditions are accepted." An impasse between the US and Iran shows no sign of thawing, with the two sides remaining at odds over the terms of ending their five-month war.
This hardening of language arrived within the last six hours and must be flagged as an active geopolitical development for positioning tonight. It directly caps the diplomatic relief trade that was beginning to deflate oil and gold's geopolitical premium.
The S&P 500 topped 7,800 for the first time, with tech outperforming again as the Nasdaq rose 1%, behind better PPI inflation data and momentum buying as oil prices eased along with Treasury yields. Overnight in Asia, Japan's broad index reached a record high and the Nikkei rose about 1.6% as chip stocks tracked a sharp rally in American semiconductor shares.
Key Moves And Levels
Wti Crude Oil
Brent fell to $87.92 on August 13, down 1.19% from the previous day. WTI's intraday picture was more complex. Today's trading range for WTI futures stretched from $82.47 to $84.34, with the lower end reflecting Asian-session weakness tied to the UAE-Iran asset transfer news flagged in this morning's briefing, and the upper end representing a partial recovery as the geopolitical rhetoric from Tehran hardened through the London session. The Iranian commander's statement that the Strait remains under Iran's control arrived in the early afternoon and capped any test of the resistance area near $84.
The IEA's monthly report indicated that the global oil market faces a shortfall of 1.8 million barrels a day this quarter as the conflict in the Middle East continues. That structural supply deficit has not disappeared. What Thursday illustrated is that the market is now trading a narrower range, with the IEA floor preventing a collapse below $81 and the diplomatic paralysis preventing a clean push toward $85 and above.
XAU/USD GOLD
The session was defined by a two-phase move. Gold hit a fresh two-month high of $4,449 during Asian trading hours, then failed to capitalise on the softer-than-expected PPI data even as the US dollar and Treasury yields edged lower. At the time of the early New York report, the metal was trading around $4,377, down 0.70% on the day.
The pattern deserves careful reading. Soft PPI should have sent gold toward $4,480. Instead the metal sold off on the release. Fading Fed rate-hike expectations and falling US Treasury yields helped cushion the downside, with bullish RSI and MACD readings suggesting buyers still retain some control. The likeliest explanation is profit-taking from the Wednesday CPI rally concentrated in the London morning, combined with a market that front-ran the soft PPI scenario by bidding gold to $4,449 in Asia. When the soft number confirmed the thesis, there were no fresh buyers at the top to sustain it. The afternoon recovery attempt must be viewed in the context of the Iranian "Strait remains blocked" statement landing as the New York session progressed.
Gold decreased significantly by $50.70 to reach $4,363.70 by the New York afternoon, though levels through the session were volatile. The $4,350 stop from the morning briefing was not breached.
XAG/USD SILVER
Silver slipped below $65 on Thursday after reaching a seven-week high earlier in the session, as investors adopted a cautious stance ahead of US producer inflation data. Silver traded at $64.48 per troy ounce in the European morning, down 1.30% from the $65.32 it cost on Wednesday. The gold/silver ratio stood at 67.88 on Thursday, up from 67.49 on Wednesday, reflecting silver's relative underperformance on the session.
Today's full intraday range stretched from $64.23 to $66.31, which captures the early Asian high and the mid-session pullback. The $65.00 support level from the morning briefing was tested during the London session and did not hold cleanly on an intraday basis, though the day's closing level will be the more important technical reference for tomorrow.
USD/JPY
The USD/JPY exchange rate rose to 159.46 on August 13, up 0.02% from the previous session. The US dollar remained practically flat against the yen on Thursday, as fading hopes of a Federal Reserve rate hike in September undermined speculative demand for the greenback. The pair maintained its near-term upside trend, yet with bulls capped below the 50% Fibonacci retracement of July's sell-off at the 159.50 area.
The 160 level was not approached. The morning briefing's framing - that 160 acts as a gravitational ceiling suppressing conviction on the long side - proved accurate for another session. The yen weakened past 159 per dollar, retracing about half of the gains from its intervention-driven rally. Japan and the US carried out a record coordinated yen-buying operation at the end of July as the currency fell to 40-year lows, but disappointed markets by not following up with additional measures.
GBP/JPY
GBP/USD kept its range near the 1.3500 psychological mark in the European session on Thursday. The mixed UK GDP and industrial data failed to inspire the British pound. Meanwhile, the US dollar stabilised after the CPI-led sell-off, checking any upside attempts in the pair.
GBP/JPY traded around the 215 pivot that the morning briefing identified as the key reference. GBP/JPY was trading near 214.99 through the afternoon, effectively unchanged. The pair did not produce the 216.50 to 217.00 extension the morning briefing had flagged as the bull case scenario for a strong GDP print, because the GDP was not strong - it was merely in line. In-line data with contracting industrial production is not the catalyst for a carry extension. The pair held the 215 area, which is the minimum required, but showed no appetite to push beyond it.
EUR/USD
EUR/USD traded modestly flat above 1.1500 in European trading hours on Thursday. The pair stalled its rebound as the US dollar consolidated losses incurred after the July CPI report. Inflation in the US moderated across a broad range of goods and services, cooling expectations for an aggressive Federal Reserve rate hike in September and weighing on the greenback.
EUR/USD was trading near 1.1526 into the afternoon session. The CFTC 2nd-percentile squeeze thesis from the morning briefing has not yet produced its acceleration leg. The PPI soft print arrived, but the pair's failure to push meaningfully through 1.1560 on the back of it tells you the first-leg short-covering from the CPI is digesting before the second leg can begin. The 1.1490 to 1.1510 support zone held throughout the session.
USD/CAD
USD/CAD was trading near 1.3944 through the session, continuing its orderly drift lower. The soft PPI adds mechanical weight to the case for further CAD strength, given that the pair's descent has been driven by a closing rate differential argument. The 0th-percentile CFTC short remains the dominant structural force. The pair is approaching the 1.3880 to 1.3910 target zone the morning briefing defined. The stop at 1.4050 was never remotely challenged.
USD/CHF
USD/CHF fell to 0.8131 on August 13, down 0.07% from the previous session. The Swiss franc traded around $0.81 after weakening to a nearly one-year low of $0.821 on July 28, as uncertainty surrounding the Middle East conflict remained elevated while inflation concerns eased. The hardening of Iranian rhetoric through Thursday afternoon has renewed CHF's geopolitical bid component. The pair sits in the lower half of its established range.
Morning Calls Review
The morning briefing made five primary calls and this briefing assesses them honestly.
The UK GDP call was delivered with conditional framing, and the conditional resolved correctly. The briefing stated a GDP matching expectations would keep GBP/JPY around 215 and would "not change the BoE outlook whatsoever" - analysts reached exactly that conclusion. GBP/USD held near 1.3495, GBP/JPY remained pinned to 215, and neither moved with conviction in either direction. The call to avoid positioning in GBP/JPY before the data was the right instruction - there was nothing to chase after it.
The PPI call was the session's centrepiece and it was directionally correct but mechanically incomplete. The briefing said a soft or in-line PPI would allow EUR/USD to rebuild above 1.1550 and would accelerate USD/CAD toward 1.3880. The PPI was not merely soft - it was softer than soft, posting flat at 0.0% against a 0.2% consensus. Yet EUR/USD failed to push cleanly above 1.1560, and USD/CAD moved further toward 1.3880 but has not yet reached it. The directional thesis was right; the velocity was not as forceful as a -0.2% surprise would normally warrant. That discrepancy is explained by the market having partially front-run the soft scenario in gold and silver during the Asian session, leaving less residual positioning to unwind when the number confirmed.
The gold call requires the most honest accounting. The morning briefing said do not add above $4,430 ahead of the PPI, and the entry trigger for new longs on PPI confirmation was a clean 15-minute close above $4,440 after the release with a target of $4,480. Gold reached $4,449 in Asian trade, pulling potential buyers toward that trigger before the data landed - then sold off through the PPI release rather than extending. The instruction to not chase above $4,430 ahead of the data was protective. The $4,350 stop on existing longs was not threatened. But the $4,440 add-on trigger was not met after the release in the manner required. Existing longs remain intact and structural.
The USD/CAD short guidance was the week's cleanest performer again. The pair grinded toward the 1.3880 target with no drama, the stop at 1.4050 was never mentioned, and the soft PPI removes the final data-event risk that could have reversed the move before reaching target. This position has behaved exactly as the CFTC positioning analysis predicted it would.
The EUR/USD guidance - hold between 1.1510 and 1.1540 ahead of the PPI, add on a clean push above 1.1560 on the first two post-release candles - was defensively sound. The pair did not provide the add-on trigger. Existing longs from the structural zone remain intact.
Silver's session is a partial disappointment. The $65.00 support zone was tested and breached intraday before a partial recovery. The $63.80 stop was not approached, but the intraday close at $64.48 before the PPI recovery attempt is technically uncomfortable. The briefing's instruction to not relax the stop after one day's rebound was prescient.
Positioning Into Tomorrow
The US Census Bureau will release the Advance Monthly Sales for Retail and Food Services for July 2026 on Friday, August 14, 2026, at 8:30 a.m. Eastern Time. Headline retail sales are expected to increase 0.3% month-on-month, following a 0.2% rise previously. The August 14 release arrives two weeks before the Jackson Hole Economic Symposium, making it one of the key data points the Federal Reserve Chair will have in hand when delivering the August 28 keynote address.
That context matters enormously. A strong retail sales print - say 0.5% or above on the headline, with a firm control group - would complicate the disinflation narrative that CPI and PPI have now spent two sessions building. Consumer spending resilience combined with lower producer prices does not immediately force a September hike, but it does introduce a tension in the data story that the market has not needed to price this week. The most disruptive retail scenario is a print that shows services spending firm while goods spending holds, because that would suggest household demand is not yet sufficiently dented by energy costs to validate the Fed's caution.
University of Michigan consumer sentiment for August is also due tomorrow, expected at 54.1, down from 55.2 previously, signaling continued pressure on household confidence. One-year inflation expectations are expected to remain at 4.2%, unchanged from the previous reading. If inflation expectations prove stickier than this, it complicates the Fed hold case.
The Hormuz situation is the overnight wildcard, as it always is, but today's session hardened that backdrop. The Iranian declaration that the Strait remains blocked and that conditions must be met before any reopening is not an escalation in military terms, but it is an escalation in diplomatic clarity. For the Asia session, watch crude's reaction to those comments. If WTI holds above $82.50 into the Tokyo open on Friday, the structural supply premium is asserting itself against the UAE-Iran de-escalation signal. A break toward $81 before the London open would suggest the diplomatic back-channel narrative is gaining credence despite the public rhetoric.
Japan's Nikkei rose to 68,490 points today, gaining 1.43% from the previous session. That record level keeps USD/JPY under pressure from the equity-strength-yen-strength correlation. The Asia session setup is one where intervention risk resurfaces as the pair approaches 159.50 to 160, and where the BoJ's September meeting pricing continues to restrain JPY shorts.
For gold, the key into Friday is whether the metal can rebuild above $4,400 on a sustained basis or whether today's profit-taking signals a more significant pullback toward $4,350. The structural bid from ETF inflows - now in a sixth consecutive session - and central bank accumulation remains intact. The retail sales number will determine whether Thursday's price action was healthy consolidation or the start of a more meaningful corrective leg.
Silver's position is more uncomfortable. The breakout zone at $65.00 to $65.50 was breached intraday Thursday before partially recovering. The retail sales number is the last major input before next week. A weak retail print that signals demand destruction from energy costs would support silver's industrial floor narrative. A strong print complicates it by reviving rate concerns.
Markets Mastered - Today's Takeaway
Two consecutive below-consensus inflation prints in 48 hours pushed September Fed hike odds from 50% to 34%, yet gold fell and EUR/USD barely moved on the better of the two numbers - which demonstrates that when a market has already positioned for the soft scenario by bidding prices higher overnight, the confirmation of that scenario has no buyers left to move it further.
The 0th-percentile USD/CAD short from the CFTC August 4 report has now delivered its third consecutive session of orderly decline without once requiring the stop at 1.4050 to even enter the conversation - CFTC positioning extremes resolve slowly and predictably when the macro environment cooperates, and Thursday's PPI removed the last data obstacle.
Iran's public statement that "the Strait of Hormuz remains blocked and will not be reopened until Iran's conditions are accepted" arrived intraday and hardened the geopolitical floor under crude and gold at precisely the moment profit-taking threatened to erode it - the Hormuz situation remains the single most important overnight risk for every instrument in this coverage universe.
Retail sales tomorrow at 13:30 UK time is the final data input before next week's FOMC minutes on August 19 - size positions for a second binary in as many days, and do not carry Thursday's post-PPI euphoria into the print without first checking whether the ten-year yield is signalling consensus or surprise.