The recent failure of computer systems, attributed to a third-party software update as per Microsoft, has disrupted operations in airlines, banks, media companies, and the London Stock Exchange. Amidst this backdrop, the dollar is showing a firmer trading bias, with its consolidation transitioning into a correction. This week, only the Swiss franc and Japanese yen among the G10 currencies gained against the dollar, indicating some unwinding of carry trades. US index futures are trading lower, with the S&P 500 down 1.25% this week and the NASDAQ down nearly 2.9%, potentially marking the largest losses in three months and since mid-April, respectively. Gold, which hit a record high near $2,483 on Wednesday, has since reversed and is now approaching the week's low near $2,400 after a nearly $30 drop today.

Asia Pacific Markets
Japan's June CPI report did not introduce significant new information compared to the Tokyo CPI data from a few weeks ago. The market focus remains on two main points: covert intervention and the upcoming BOJ meeting at the month's end. In the Asia Pacific session, the dollar extended its recovery, reaching JPY 157.85.
The Reserve Bank of Australia is viewed as one of the most hawkish, with a rate cut not anticipated until well into next year. Despite healthy job growth, the Australian dollar made little progress yesterday and slipped slightly in response to a stronger US dollar, highlighting its underlying resilience.

European Markets
As expected, the ECB left rates unchanged yesterday. The euro traded with a heavier bias but did not lose more ground against the sterling or the yen, indicating a broader dollar movement rather than specific euro weakness. The swaps market suggests an 80% chance of a rate cut at the next ECB meeting on September 12, consistent with the average expectation this month.
In the UK, June retail sales fell twice as much as expected, with a 1.2% drop following a 2.9% surge in May. Sterling, which reached a one-year high mid-week near $1.3045, has fallen to a new low for the week today near $1.2900.

American Markets
The week concludes with a light news flow. Fed officials Williams and Bostic are scheduled to speak today, but their views are already well known. NY Fed President and FOMC Vice Chair Williams echoed the broad consensus that while the moderation in inflation is encouraging, more data is needed. The market sees almost no chance of a rate cut later this month, but fully anticipates a cut at the following meeting on September 18.
Midweek, the Dollar Index dipped below 104.00 for the first time in three months but has since recovered.