No Weekend Breakthrough Regarding Hormuz… Investors Waiting for Midweek Release of U.S. Inflation Figures
August 10, 2026
(127) The deadlock in efforts to reopen shipping traffic through the Strait of Hormuz goes on, with Iran insisting on 14 demands from the United States that are far beyond what the Trump Administration is willing to accept. The grave doubts that Middle Eastern experts expressed very early into the initial ceasefire have proven prescient, but the price of oil has not scaled the triple digit heights this summer that had been feared way back then. At $79.64 per barrel, West Texas Intermediate crude is around 2% above Friday’s closing level, nevertheless, and a danger persists that the $100 threshold could still be exceeded once inventories deplete.
The big foreign exchange market story remains the risk of more intervention, not only in support of the Japanese yen but also the South Korean won and Indonesian rupiah. A summary of the Bank of Japan Board meeting on July 30-31 defends the decision not to change the central bank policy interest rate then but stresses upside price risks and speaks of a possible inflection point in the rate normalization process that may require more frequent and larger-sized increases in the nominal rate:
As the global environment is turning to a phase of policy interest rate hikes, the situation has
shifted to a new phase in which the Bank needs to adopt a nimble approach in response to
factors such as changes in overseas financial conditions and to discuss the size of a rate hike,
rather than adhering to a certain pace of rate hikes. As concerns over a downward deviation in
real economic activity have subsided and inflationary pressures could become evident from the
summer, it is necessary for the Bank to shift from the current stance of encouraging a rise in
underlying inflation and to clearly demonstrate to the market its determination to prevent
upward deviations in prices.
Dollar increases overnight against the yen and won stick out. The U.S. currency rose 0.7% against the yen and won, while exhibited changes between +0.1% and -0.1% against the euro, Swissy, kiwi, loonie, peso, and Aussie dollar.
Ten-year sovereign debt yields took their cue from energy prices, rising by two basis points in Japan, Switzerland, Great Britain and the United States and by a basis point in Germany, France, Italy and Spain. Equity markets took their cue from the U.S. rally on Friday and rose 2.1% in Japan, 1.6% in Taiwan, 1.1% in Hong Kong and Singapore, and 0.7% in South Korea and China. Movement this Monday in European share prices and U.S. stock futures have been minimal, by comparison. Silver’s price rose another 1.8%, but gold is just 0.1% higher.
Today’s menu includes CPI, PPI and industrial production figures from many countries.
Chinese consumer price inflation halved to a 6-month low of 0.5% in July. Core CPI of 0.9% also represents a 6-month low.
Danish consumer price inflation slowed to a 3-month low of 1.7% last month, while Norwegian CPI inflation rose to a 2-month high of 3.0%.
More elevated rates of CPI inflation last month were experience in Lithuania (a 35-month high of 5.9%), Albania (a 30-month high of 3.4%), Mongolia (a 13-month high of 13.0%), and Rwanda (a 34-month high of 13.8%). Moldovan consumer price inflation slipped another 0.2 percentage points to a 4-month low but, at 6.3%, surpassed 6.0% for a fourth straight month. Egyptian CPI inflation returned to a 3-month high of 14.9% and was not far below the 10-month peak of 15.2% touched back in March.
Chinese producer price inflation slowed more sharply than forecast to a 3-month low of 3.5% in July. At the other extreme, producer price inflation in Norway boomeranged to 23.4% in July after printing at 24.8% in May but 14.9% in June. In Kazakhstan, PPI inflation returned to single digits, a 14-month low of 9.1%.
In comparisons of June 2026 to June 2025, industrial production fell by 1.4% in Turkey, 0.7% in Slovenia, 0.4 in Finland and 16.3% in Saudi Arabia but rose 2.1% in Slovakia, 3.1% in the Netherlands and 1.1% in Greece. Austrian industrial production was unchanged from a year earlier.
Japan’s 17.429 trillion yen current account surplus in the first half of 2026 was 22.5% wider than a year earlier. Japan’s economy watchers index, a barometer of the sentiment of service sector workers, rose to 5-month high last month.
Consumer confidence in Indonesia slid further in July to a 10-month low.
The Sentix gauge of investor sentiment toward the euro area economy turned positive for the first time in a half year with a reading of +0.9 in August following -3.1 in July and as low as -19.2 in April.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bank of Japan Board Summary, Chinese CPI and PPI, Japanese current account and economy watchers index
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