The US dollar faces another pivotal week as investors assess whether inflation is beginning to stabilize and whether American consumers continue to support economic growth despite elevated interest rates.
Wednesday's US CPI report will be the week's headline event. Markets expect headline inflation to ease slightly to 3.4% year-on-year, while core inflation is forecast to remain at 2.5%. Any upside surprise could reinforce expectations that the Federal Reserve will keep interest rates higher for longer, while softer inflation may revive speculation over future policy easing.
Attention will then turn to Friday's retail sales report, a key gauge of consumer spending and the health of the US economy. Stronger-than-expected figures would suggest household demand remains resilient, supporting the Fed's cautious stance on interest rates.
Our focus this week will be on Alpari's USDInd, which may be preparing for a larger breakout move as markets react to the latest inflation and consumer spending data.
US inflation and retail sales in focus
Markets will closely monitor key US economic data next week as investors reassess the outlook for inflation, consumer spending and Federal Reserve policy. The Reserve Bank of Australia's policy decision and UK GDP data will also be in focus.
Tuesday, August 11th: RBA Interest Rate Decision
The Reserve Bank of Australia is expected to leave interest rates unchanged. Investors will look for any changes in policymakers' guidance on inflation and the outlook for future rate moves.
Wednesday, August 12th: US CPI
The latest US inflation report could become the week's key market catalyst. A stronger-than-expected reading may reinforce expectations that the Federal Reserve will keep interest rates elevated for longer, supporting the US dollar.
Thursday, August 13th: UK GDP
Economic growth figures will provide fresh insight into the health of the UK economy and could influence expectations around future Bank of England policy.
Thursday, August 13th: US PPI
Producer price inflation may offer additional clues about pipeline inflation pressures ahead of future consumer price reports.
Friday, August 14th: US Retail Sales
Retail sales will provide an important update on the strength of US consumer spending. Robust demand could reinforce confidence in the resilience of the US economy and influence expectations for Federal Reserve policy.
Friday, August 14th: Michigan Consumer Sentiment
The preliminary August survey will offer another reading on consumer confidence and inflation expectations, potentially shaping market sentiment toward the US dollar.