Forecasting the Coming Week: US CPI and Fed’s easing should rule the sentiment

A very volatile week left the US Dollar slightly on the defensive, while calm appears to have returned to the markets and volatility is en route to its comfort zone following a few chaotic days. In the meantime, recession concerns and Fed rate cut bets will remain at the centre of the debate next week with the releases of US CPI and Retail Sales.

The US Dollar Index (DXY) recouped most of Monday’s decline to seven-month lows near 102.00, although it could prevent the third consecutive weekly drop. Producer Prices and the NFIB Business Optimism Index are due on August 13. Next on the US docket are the weekly Mortgage Applications measured by MBA, seconded by the Inflation Rate and the EIA report on US crude oil inventories on August 14. The weekly Initial Jobless Claims, Retail Sales, the Philly Fed Manufacturing Index, Business Inventories, Industrial Production, the NAHB Housing Market Index, and Net Long-term TIC Flows will all be unveiled on August 15. Finally, Building Permits, Housing Starts, and the preliminary Michigan Consumer Sentiment will be published on August 16.

EUR/USD just managed to add to last week’s gains, although a convincing breach of the psychological 1.1000 barrier still remained elusive. Germany’s Current Account results kick off the weekly calendar in the region on August 12. The Economic Sentiment gauged by the ZEW institute for Germany and the euro area will be unveiled on August 13. Another estimate of Q2 GDP Growth Rate, and Industrial Production, all in the euro bloc are due on August 14. On August 15, Balance of Trade figures in the euro zone will only be released.

Gains in the latter part of the week were not enough to motivate GBP/USD to reverse the leg lower, which reached the fourth week in a row on Friday. The UK labour market report is due on August 13, seconded by the Inflation Rate on August 14. The UK GDP readings, Goods Trade Balance, Industrial Production, Manufacturing Production and the NIESR Monthly GDP Tracker are all expected on August 15. Retail Sales will close the weekly calendar on August 16.

USD/JPY set aside five consecutive weekly declines, regaining some upside traction after bottoming out in multi-month lows near 141.70 at the beginning of the week. Producer Prices and Machine Tool Orders are due on August 13. Preliminary GDP Growth Rate, final Industrial Production, and weekly Foreign Bond Investment figures are due on August 15. The Reuters Tankan Index and the Tertiary Industry Index will be published on August 16.

AUD/USD advanced markedly and left behind three weeks in a row of losses, so far meeting decent resistance near 0.6600 the figure, where the key 200-day SMA also sits. The Westpac Consumer Confidence print is due on August 13 seconded by the Q2 Wage Price Index. On August 15, Consumer Inflation Expectations are due, followed by the release of the labour market report in Australia. Finally, the Leading Index tracked by Westpac is due on August 16.

Anticipating Economic Perspectives: Voices on the Horizon

• The RBA’s Hauser speaks on August 12
• The Fed’s Bostic is due to speak on August 13.
• The Fed’s Harker and Musalem will speak on August 15.
• The RBNZ’s Orr will speak on August 16, seconded by the RBA’s Bullock and the Fed’s Goolsbee.

Central Banks: Upcoming Meetings to Shape Monetary Policies

• The RBNZ meets on August 14.
• The Norges Bank and the Bangko Sentral ng Pilipinas (BSP) will decide on rates on August 15.