The powerful short squeeze on the yen, which has disrupted the capital markets this week, has stalled today. This marks the first day this week where the dollar has not fallen below the previous day's low and has managed to rise slightly above the previous session's high. Notably, the yen and Swiss franc are the only two G10 currencies that have not strengthened today.
After falling to approximately $2,253 yesterday, gold is consolidating below $2,380, resulting in a weekly decline of about 1.2%. September WTI posted a potential key reversal yesterday, but follow-through buying was limited to around $78.60, and it is currently straddling $78 in Europe.

Asia Pacific Markets
A significant factor causing turmoil in the capital markets has been the strong short squeeze of the Japanese yen, which now appears to have run its course. Today's report on Tokyo's July CPI is unlikely to alter expectations for the Bank of Japan's meeting next week. After hitting its lowest level since early May, the dollar recovered to a new session high yesterday, slightly above JPY154.30. Today is the first session this week where the dollar has not dropped below the previous day's low.
The Australian dollar's downtrend extended to the ninth consecutive session yesterday, making this the worst week of the year for the Aussie. Despite today's modest gains, it is still down about 1.8% for the week.

European Markets
The ECB's survey indicated that one- and three-year CPI expectations remained steady at 2.8% and 2.3%, respectively, in May. The euro briefly rose above Wednesday's high yesterday near midday in North America but faced strong selling pressure that brought it back to the middle of the day's range. Corrective forces are still in play, and the euro is trading in a tight range around $1.0850 today.
Sterling has also stabilized, trading in a narrow quarter-cent range above $1.2850.

American Markets
Today's US data on personal income, consumption, and deflators pose headline risk but are not expected to provide new information. Yesterday's Q2 GDP report already included personal income and consumption data.
The US dollar consolidated after reaching a marginal new high for the year against the Canadian dollar. While the upside momentum was not sustained, the greenback still settled above the trendline drawn from last November's and April's highs. The US dollar is on a seven-day advance and has risen in 10 of the past 11 sessions.