Forecasting the upcoming week: US inflation and tariffs will be in the spotlight

Pablo Piovano FXStreet

The US Dollar (USD) has resumed its weekly downside, as investors have started to get ready for a more political and dovish Fed, all following news that Stephen Miran will replace Adriana Kugler as one of the FOMC Governors. In the meantime, trade uncertainty remained far from mitigated after “reciprocal tariffs” against many US trade partners kicked in on Thursday.

The US Dollar Index (DXY) extended further its rejection from the previous week’s highs past the psychological 100.00 barrier, challenging once again the 98.00 area despite the weekly recovery in US yields across the curve. The Inflation Rate will be the salient event on August 12, seconded by the NFIB Business Optimism Index, and the API’s weekly report on US crude oil stockpiles. The usual weekly MBA Mortgage Applications, and the EIA’s weekly report on US crude oil inventories are expected on August 13. Producer Prices will be released on August 14 alongside weekly Initial Jobless Claims. Wrapping up the calendar on August 15, Retail Sales will take centre stage, seconded by Export/Import Prices, the NY Empire State Manufacturing Index , Industrial and Manufacturing Production, Business Inventories, TIC Flows, and the preliminary U-Mich Consumer Sentiment gauge.

The resurgence of the bid bias allowed EUR/USD to trade on a positive foot in the last five days, including a test of the key barrier at 1.1700 the figure. The ZEW Economic Sentiment in Germany and the brodaer Euroland will kickstart the domestic docket on August 12. The final Inflation Rate in Germany is due on August 13, while another estimate of the Q2 GDP Growth Rate in the euro area wil be published on August 14, ahead of Industrial Production and Q2 Employment Change figures. On August 15 comes Germany’s Wholesale Prices.

Despite Friday’s pullback GBP/USD managed to resume the upside momentum on the weekly chart, reclaiming the area beyond the 1.3400 hurdle. The BRC Retail Sales Monitor is due on August 12, ahead of the publication of the key labour market report. The RICS House Price Balance is expected on August 14, followed by the flash Q2 GDP Growth Rate, Business Investment, Goods Trade Balance, Industrial and Manufacturing Production, quarterly Labour Productivity, Construction Orders, and the NIESR Monthly GDP Tracker.

USD/JPY navigated choppy waters throughout the week, with the weekly upside capped by the 148.00 region. Producer Prices, the Reuters Tankan Index, and Machine Tool Orders are all due on August 13. The preliminary Q2 GDP Growth Rate, final Industrial Production, Capacity Utilisation, and Foreign Bond Investment figures will be published on August 15.

Following the rest of its risk-linked peers, AUD/USD regained traction and end the week with a decent adavance, managing to reclaim the 0.6500 hurdle and above. The NAB Business Confidence index is due on August 12, while the Wage Price Index, Home Loans, and Investment Lending for Homes are all due on August 13. The crucial labour market report will be released on August 14.

Anticipating economic perspectives: Voices on the horizon

The Fed’s Barkin and Schmid will speak on August 12.

The Fed’s Barkin, Goolsbee, and Bostic speak on August 13.

The Fed’s Barkin will speak on August 14.

Central banks: Upcoming meetings to shape monetary policies

The RBA will decide on rates on August 12 (act. 3.85% vs. 3.60% exp.).

The BoT meets on August 13 (act. 1.75% vs. 1.50% exp.).

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

GBP/USD bounces off lows, back above 1.3200

After bottoming out near 1.3160, GBP/USD manages to regain a bit of shine and reclaim the 1.3200 mark and beyond at the end of the week. Stronger-than-expected UK Retail Sales data seem to be helping the British Pound limit its losses, while the chaotic UK political environment keeps the bulls at bay for now.

EUR/USD looks consolidative around 1.1460

EUR/USD stages a modest rebound after slipping to a three-month low below 1.1420 at the end of the week. That said, the pair now looks to consolidate humble gains just above 1.1460 despite growing uncertainty surrounding the next round of US-Iran negotiations, which keeps the US Dollar’s downside contained.

Gold slips back to six-day lows, targets $4,100

Gold retreats for the third consecutive day on Friday, eroding gains seen in the first half of the week and approaching the key $4,100 mark per troy ounce. Indeed, the precious metal continues to face headwinds from the Fed's hawkish stance and renewed uncertainty surrounding the next round of US-Iran negotiations.

Breaking: Iran closes the Strait of Hormuz amid ceasefire deal violation

Iran says it is closing the Strait of Hormuz after accusing the United States (US) and Israel of violating the ceasefire. According to Iran, the decision came over the continued Israeli strikes in Lebanon. The Iranian Revolutionary Guard Corps Navy issued a warning to all vessels: "Do not approach the Strait of Hormuz; otherwise, your security will be jeopardized."

The Iran war didn't break the US economy, but what happens next?

Nearly four months after the start of the Iran war, the US economy remains remarkably resilient. While the conflict initially triggered a severe disruption to global energy markets and a sharp rise in Oil prices, recent diplomatic progress between Washington and Tehran has eased concerns about a prolonged supply shock.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.