The US dollar is facing pressure due to the latest US inflation data. Investors are increasingly expecting a rate cut at the Fed’s September 17-18 meeting. In addition, some economists are still predicting that the Fed will cut rates by 100 bps this year.
The upcoming week of 26.08.2024 – 01.09.2024 marks the end of the month. Although it won’t be packed with major macroeconomic data releases, market participants will closely watch for the publication of macro statistics on the USA, Australia, Germany, Japan, the eurozone, and Canada.
Note: During the coming week, new events may be added to the calendar, and / or some scheduled events may be cancelled. GMT time
The article covers the following subjects:
Key facts
- Monday: no important macro statistics is scheduled.
- Tuesday: US Consumer Confidence Index.
- Wednesday: Australia’s CPI.
- Thursday: German CPI, Japanese CPI, US GDP.
- Friday: Eurozone CPI, US PCE.
- Key event of the week: US PCE core price index publication.
Monday, August 26
The UK has a bank holiday on Monday, so the country’s banks will not operate. Thus, the trading volume will be lower than usual during the European trading session, and the pound movement will be moderately sluggish.
12:30 – USD: Durable Goods Orders. Nondefense Capital Goods Orders Excluding Aircraft
Durable goods are tangible products with an expected lifespan of more than three years, such as cars, computers, household appliances, and aircraft. These goods require significant investment to produce. Durable goods orders data is a leading indicator representing the change in the total value of new orders received by producers. An increase in orders for these goods indicates that manufacturers are ramping up production to meet the demand.
Capital goods are durable items used to produce other goods and services. The current indicator excludes goods manufactured in the defense and aviation sectors of the US economy.
Positive data boost the US dollar, while negative figures adversely affect it. Any indicator deterioration compared to previous and/or forecasted values may also have a detrimental effect on the US dollar quotes, while data surpassing the forecast will positively influence the currency.
- Previous values of the durable goods orders indicator: -6.7%, +0.1%, +0.6%, +0.8%, +0.7%, -6.9%, -0.3% in December 2023;
- Previous values of the nondefense capital goods orders excluding aircraft indicator: +1.0%, -0.9%, +0.2%, -0.1%, +0.4%, -0.4%, -0.6% in December 2023.
Tuesday, August 27
14:00 – USD: Consumer Confidence Index
The report on the results of a Conference Board survey conducted among nearly 3,000 US households offers respondents the opportunity to assess the current and future economic conditions as well as the overall economic situation in the United States. The confidence of US consumers in the country’s economic development and the stability of their economic situation is a key indicator of consumer spending, which significantly influences overall economic performance. A high level of consumer confidence indicates economic growth, while a low level indicates stagnation.
Previous values: 100.3, 100.4, 102.0, 97.0, 104.7, 106.7, 114.8, 110.7, 102.0, 102.6, 103.0, 106.1, 117.0, 109.7, 102.3, 101.3, 104.2.
High indicator readings bolster the US dollar, while the decrease in the figures weakens the greenback.
Wednesday, August 28
01:30 – AUD: Consumer Price Index
The Consumer Price Inflation Index (CPI), published by the Reserve Bank of Australia and the Australian Bureau of Statistics, gauges retail prices of goods and services in Australia. The CPI is the most significant indicator of inflation and changes in consumer preferences. A high indicator reading is positive for the Australian dollar, while a low reading is negative. Previous values: +3.8%, +3.6%, +3.5%, +3.4%, +3.4% in January 2024.
The Australian central bank’s CPI inflation target ranges between 2% and 3%. According to the minutes of a recent RBA Board meeting, the bank may need to increase interest rates over time to bring inflation back to the target range and take further measures in the coming months to stabilize monetary conditions in Australia.
Notably, the RBA minutes had previously stated that the central bank would not raise rates until the CPI inflation reaches its target range of 2% to 3% on a sustainable basis. According to the RBA board, inflation hikes were unlikely until at least 2024. Now, the RBA, like most of the world’s other major central banks, is facing persistently high inflation and anticipates that the country’s inflation rate will gradually decrease to the target level by the end of 2025.
The expected positive CPI reading is likely positive for the Australian dollar. If the indicator readings are worse than the forecast or the previous value, the Australian dollar will face short-term negative effects.
Thursday, August 29
12:00 – EUR: German Harmonized Index of Consumer Prices (Preliminary Estimate)
The Harmonized Index of Consumer Prices (HICP) is published by the European Statistics and is calculated using a methodology agreed upon by all EU countries. The HICP is an indicator for measuring inflation and is used by the European Central Bank to assess price stability. A positive index result strengthens the euro, while a negative one weakens it.
Previous values: +2.6%, +2.5%, +2.8%, +2.4%, +2.3%, +2.7%, +3.1% in January 2024, +3.8% in December, +2.3% in November, +3.0% in October, +4.3% in September, +6.4% in August, +6.5% in July, +6.8% in June, +6.3% in May, +7.6% in April, +7.8% in March, +9.3% in February, +9.2% in January, +9.6% in December, +11.3% in November, +11.6% in October, +10.9% in September, +8.8% in August, +8.5% in July, +8.2% in June, +8.7% in May, +7.8% in April, +7.6% in March, +5.5% in February, +5.1% in January 2022 (YOY).
The data suggests that German inflation continues to decelerate, albeit at a slower pace than expected. This situation is putting pressure on the ECB to ease its monetary policy. Figures lower than the previous reading will likely affect the euro negatively. Conversely, the resumption of inflation growth may provoke the appreciation of the euro. The growth of the indicator values is a positive factor for the currency.
If the August data turns out to be better than previous values, the euro may strengthen in the short term.
12:30 – USD: US GDP Annual Growth Rate for Q2 (Second Estimate). Jobless Claims number
GDP data is one of the key indicators, along with labor market and inflation data, for the Fed in terms of its monetary policy. A positive indicator reading strengthens the US dollar, while a weak GDP report is negative for the currency. GDP grew +1.4% in Q1 2024, after gaining +3.4% in Q4 2023, +4.9%, +2.1% in Q2, +2.2% in Q1 2023.
If the data indicate a decline in GDP in Q2 2024, the US dollar will face significant pressure. Conversely, positive GDP figures will bolster the greenback and US stock indices.
GDP’s preliminary estimate stood at +2.8%.
At the same time, the US Department of Labor will publish a weekly report on the US labor market with data on the number of initial and continuing jobless claims. The labor market condition, along with GDP and inflation data, play a vital role in the Federal Reserve’s decision-making process regarding monetary policy.
Higher-than-expected indicator readings and a rise in its values indicate weakness in the labor market, which could put pressure on the US dollar. Conversely, the indicator decline and its low values demonstrate labor market recovery and may positively impact the currency.
Initial and continuing jobless claims are expected to remain at the low levels seen before the outbreak of the coronavirus pandemic. This bodes well for the US dollar, signaling stability in the US labor market.
- Previous initial jobless claims weekly values: 250k, 235k, 243k, 223k, 239k, 234k, 238k, 243k;
- Previous continuing jobless claims weekly values: 1,864k, 1,871k, 1,869k, 1,844k, 1,860k, 1,847k, 1,856k.
23:30 – JPY: Tokyo Consumer Price Index (CPI). Tokyo CPI excluding Food and Energy
The Tokyo Consumer Price Indexes, published by the Statistics Bureau of Japan, gauge the price change of a selected basket of goods and services over a given period. These indexes are key indicators for assessing inflation and consumer preferences.
Previous values (YOY):
- Tokyo CPI: 2.2%, +2.3%, +2.2%, +1.8%, +2.6%, +2.5%, +1.8%, +2.4%, +2.6%, +3.3%, +2.8%, +2.9%, +3.2%, +3.2%, +3.2%, +3.5%, +3.3%, + 3.4%, +4.4% in January 2023;
- Tokyo CPI excluding food and energy: +1.5%, +1.8%, +2.2%, +1.8%, +2.9%, +3.1%, +3.3%, +3.5%, +3.6%, +3.8%, +4.0%, +4.0%, +4.0%, +3.8%, +3.9%, +3.8%, +3.4%, +3.1%, +3.0% (in January 2023).
An indicator reading weaker than forecast and/or previous values may weaken the yen.
Friday, August 30
01:30 – AUD: Retail Sales
The Retail Sales Index, published monthly by the Australian Bureau of Statistics, measures the total retail sales volume. The index is often considered an indicator of consumer confidence and spending, reflecting also the near-term state of the retail sector. In advanced economies, domestic consumption plays a significant role in driving GDP growth.
Therefore, deterioration of the indicator values may reveal problems with the country’s GDP growth in the future. This is a negative factor for the national currency, as the economic slowdown may force the national central bank to ease monetary policy for businesses by lowering interest rates in particular.
A surge in the index readings is usually positive for the Australian dollar.
Previous index value: +0.5% in June, +0.6%, +0.1% -0.4%, +0.2% +1.1%, -2.1%, +1.6%, -0.4%, +0.9%, +0.3%, +0.5%, -0.8%, +0.8%, 0%, +0.4%, +0.2%, +1.9%, -3.9%, +1.7%, +0.4%, +0.6%, +0.6%, +1.3%, +0.2% in prior months.
If the data is weaker than the previous figures, the Australian dollar may experience a short-term decline. Conversely, if the data surpasses the previous values, the currency will likely strengthen.
06:00 – EUR: German Retail Sales
Retail Sales is the main indicator of consumer spending in Germany, showing the change in retail sales. A high indicator reading boosts the euro, while a low one weakens the currency.
Previous values: -1.2% (-0.6% YOY), +1.8% (+0.3% YOY), -1.9% (-2.7% YOY), -0.4% (-1.4% YOY) in January 2024, -1.6% (-1.7% YOY), -2.5% (-2.4% YOY), +1.1% (-0.1% YOY), -0.8% (-4.3% YOY), -1.2% (-2.3% YOY), -0.8% (-2.2% YOY), -0.8% (-1.6% YOY), +0.4% (-2.1% YOY), +0.8% (-4.3% YOY), -2.4% (-8.6% YOY), -1.3% (-7.1% YOY), -0.3% (-3.8% YOY in January 2023).
The data suggests that the German economy’s recovery has been uneven, with some months experiencing a slowdown. Indicator readings higher than forecasted and/or previous values are likely positive for the euro in the short term.
09:00 – EUR: Consumer Price Index. Core Consumer Price Index (Preliminary Release)
The Consumer Price Index (CPI), published by Eurostat, measures the price change of a selected basket of goods and services over a given period. The CPI is a key indicator for evaluating inflation and consumer preferences. A positive indicator result strengthens the euro, while a negative one weakens it.
Previous values (YOY): +2.6%, +2.5%, +2.6%, +2.4%, +2.4%, +2.6%, +2.8% in January 2024, +2.9%, +2.4%, +2.9%, +4.3%, +5.2%, +5.3%, +5.5%, +6.1%, +6.1%, +7.0%, +6.9%, +8,5%, +8.6% in January 2023, +9.2%, +10.1%, +10.6%, +9.9%, +9.1%, +8.9%, +8.6%, +8.1%, +7.4%, +7.4%, +5.9%, +5.1% in January 2022.
If the data is worse than the forecasted value, the euro may face a short-term but sharp decline. Conversely, if the data surpasses the forecast and/or the previous value, it could strengthen the euro in the short term. The ECB’s consumer inflation target is just below 2.0%, and the reading suggests that inflation in the eurozone is still high, although the pace of increase is slowing down.
The Core Consumer Price Index (Core CPI) determines the price change of a selected basket of goods and services over a given period and is a key indicator for assessing inflation and consumer preference. Food and energy are excluded from this indicator in order to provide a more accurate assessment. A high result strengthens the euro, while a low one weakens it.
Previous values (YOY): +2.9%, +2.9%, +2.9%, +2.7%, +2.9%, +3.1%, +3.3% in January 2024, +3.4%, +3.6% +4.2%, +4.5%, +5.3%, +5.5%, +5.5%, +5.3%, +5.3%, +5.6%, +5.7%, +5.6%, +5.3%, +5.2%, +5.0%, +5.0%, +4.8%, +4.3%, +4.0%, +3.7%, +3.8%, +3.5%, +3.0%, +2.7%, +2.3% in January 2022.
If the August 2024 index figures are weaker than the previous or forecasted value, the euro may be negatively affected. If the data turns out to be better than the forecasted or previous value, the currency will likely grow.
According to recently reported data, the eurozone’s inflation rate is still high, above the ECB’s target of 2.0%. As a result, the ECB is inclined to maintain high interest rates, which is favorable for the euro in normal economic conditions.
12:30 – CAD: Canadian GDP. Canada’s Annual GDP Growth
The release of Canada’s GDP report by Statistics Canada significantly impacts the performance of the Canadian dollar. A positive report will bolster the Canadian dollar, while a weak GDP report will negatively affect the currency. The previous report showed a +0.2% GDP growth in Canada in May 2024.
Canada’s quarterly GDP report reflects the total volume of all goods and services produced by Canada during the quarter (YOY) and is considered an indicator of the overall Canadian economy. GDP grew +0.4% (+1.7% YOY) in Q1 2024, following growth of +0.2% (+1.0% YOY) in Q4 2023, a decline of -0.3% (-1.1% YOY) in Q3, -0.2% in Q2, +2.6% growth in Q1 2023, zero growth in Q4, +2.9% growth in Q3 2022, +3.3% in Q2 2022, +3.1% in Q1 2022 (YOY).
If the Q2 2024 data is better than the previous and/or forecasted value, the Canadian dollar will strengthen.
12:30 – USD: Core Personal Consumption Expenditures
Personal Consumption Expenditures (PCE) data reflect the average amount of money consumers spend per month on durable goods, consumer goods, and services. The core PCE price index excludes food and energy prices. The annual core PCE is the main inflation gauge used by the US Fed as the primary inflation indicator.
The inflation rate, along with the labor market and GDP data, is crucial for the Fed in determining its monetary policy. Growing prices exert pressure on the central bank to tighten its policy and raise interest rates.
The PCE data above the forecasted and/or previous values may boost the US dollar, while a decline in the reading will likely exert a negative impact on the greenback.
Previous values (YOY): +2.6%, +2.6%, +2.8%, +2.8%, +2.8%, +2.9% in January 2024, +2.9%, +3.2%, +3.5%, +3.7%, +3.8%, +4.3%, +4.3% +4.7%, +4.8%, +4.8%, +4.7%, +4.7%, +4.6%, +4.8%, +5.1%, +5.2%, +4.9%, +4.7%, +4.8%, +4.7%, +4.9%, +5.2%, +5.3%, +5.2% in January 2022.
Saturday, August 31
01:30 – CNY: China’s Manufacturing and Services PMI by the China Federation of Logistics and Purchasing (CFLP)
This indicator is an essential gauge of the overall Chinese economy. An indicator reading above 50 is positive for the the yuan, while a value below 50 is negative for the currency.
Previous values: 49.4, 49.5, 50.4, 50.8, 49.2, 49.0, 49.5, 50.2, 49.3, 49.0, 48.8, 49.2, 51.9, 52.6, 50.1 in January. The relative rise in the index and the value of 50 should positively impact the yuan. Data above 50 indicates increased economic activity, positively affecting the national currency. Conversely, if the index value is below 50, the yuan will face pressure and probably decline.
Likewise, the services sector PMI assesses the state of the services sector in the Chinese economy. An indicator result above 50 is seen as positive for the yuan. Previous values: 50.2, 50.5, 51.2, 53.0, 50.7, 50.4, 50.6, 51.7, 51.5, 53.2, 54.5, 56.4, 58.2, 56.3, 54.4 in January. Despite the relative decline, the indicator is still above the 50 value, likely influencing the yuan positively. Conversely, the indicator below 50 suggests that the yuan will face pressure and probably decline.
Price chart of EURUSD in real time mode
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