US Dollar

This week will be crucial for the US Dollar, with inflation taking center stage in the markets.

On Tuesday, August 13th, the U.S. Producer Price Index will be of interest to investors. Economists consider producer prices to be a leading indicator of consumer price inflation. Producers adjust their prices to the demand environment, which affects consumer price trends. If producer prices fall, it could signal a moderating inflation outlook, which in turn could lead to multiple rate cuts by the Federal Reserve in 2024.

The release of consumer inflation data on Wednesday, August 14th will be in focus. If annualized inflation falls, it could reinforce market expectations for Fed rate cuts in September, November and December.

On Thursday, August 15, U.S. retail sales and job market data will also be of interest. An increase in retail sales would support hopes of a soft landing for the U.S. economy, as private consumption contributes more than 60% to the economy. However, changes in jobless claims could have a greater impact on the demand for the US dollar, especially after the recent market reaction to the US jobs data. A surge in jobless claims could reignite fears of a hard landing for the economy.

On Friday, August 16th, the Consumer Confidence Index will be released. A significant rise in the Michigan Consumer Confidence Index could indicate an optimistic outlook for consumer spending, potentially dampening market expectations for multiple rate cuts by the Federal Reserve in 2024. Higher consumer confidence could signal increased spending, driving demand-driven inflation.

In addition to the data, investors should also pay attention to speeches from members of the Federal Open Market Committee (FOMC). Dovish views on the economic outlook, inflation, the job market, and the Fed's rate path could influence demand for the U.S. dollar.

Euro

On Monday, August 12, German wholesale inflation data will influence EURUSD demand. If wholesale prices rise more than expected, it could signal a pickup in headline inflation. An upward trend in consumer prices could influence investors' expectations for multiple European Central Bank (ECB) rate cuts in 2024.

On Tuesday, the ZEW economic sentiment indexes for Germany and the Eurozone will attract investors' attention. If the sentiment index slips, it could be in line with recent economic indicators and increase expectations of the eurozone falling into recession. Rising recession risks in the eurozone could affect investors' bets on multiple ECB rate cuts in 2024.

On Wednesday, Eurozone industrial production, employment and GDP secondary valuation data will be in focus.Revisions to GDP data and employment trends could influence Euro demand to a greater extent. A weaker-than-expected employment data could support the argument for multiple ECB rate cuts in 2024. Deteriorating labor market conditions could affect wage growth, disposable income and consumer spending.

On Friday, Eurozone trade data will be in focus. Trends in imports and exports could influence the market's view of the eurozone economy and the path of ECB interest rates.

In addition to the data, comments from ECB members need to be considered. Their views on inflation and the timing of interest rate cuts will influence Euro demand.

Pound

On Tuesday, the UK's labor market data will be in focus for the pound. Slowing wage growth and rising unemployment could support investor expectations of a Bank of England (BoE) rate cut in Q4 2024.

On Wednesday, UK inflation data will be the key figure to watch. If headline inflation rises, it could reduce investor expectations for a rate cut by the BoE in the fourth quarter of 2024.

On Thursday, UK GDP data will attract investor interest. If growth is slower than expected, it could reignite investor expectations of a recession in the UK. Rising recession risks could support a more dovish rate path for the BoE.

In addition, the release of UK retail sales data on Friday will influence the BoE's interest rate path. If consumer spending trends higher, it could boost demand-driven inflation and reduce investor expectations of a BoE rate cut in the fourth quarter of 2024. An increase in retail sales could ease recessionary fears, as private consumption contributes more than 60% to the UK economy.

Canadian Dollar

On Friday, Canadian housing data will put the Canadian dollar in the spotlight. An increase in housing starts could indicate an elevated demand environment. Increased demand could push up prices, consumer confidence and spending. Conversely, weakness in housing starts could prompt the Bank of Canada to consider cutting interest rates to support the housing market.

Australian Dollar

On Tuesday, consumer confidence and wage growth data from Australia will impact the Australian dollar. If consumer confidence rises, it could indicate stronger consumer spending, driving demand-driven inflation.

Additionally, higher wage growth could boost disposable income spending, increasing the likelihood of a rate hike by the Reserve Bank of Australia (RBA). Last week, RBA Governor Michele Bullock warned that the RBA would not hesitate to raise rates if inflation remains high.

On Thursday, Australia's labor market will be in focus. Labor market conditions could affect wages, disposable income and consumer spending trends. Unemployment remaining stable could indicate a stubborn inflationary environment and the RBA could take a more hawkish rate path.

New Zealand Dollar

On Wednesday, the Reserve Bank of New Zealand's (RBNZ) interest rate resolution will be the focus of attention for the New Zealand dollar. A surprise rate cut could have a negative impact on the NZD.

On Friday, New Zealand's Manufacturing Purchasing Managers' Index (PMI) data will also need to be watched. A more pronounced contraction in the manufacturing sector could impact the labor market. Deteriorating labor market conditions could affect wage growth and disposable income, increasing the likelihood of an RBNZ rate cut. In June this year, the Employment Index fell to its lowest level since July 2019 (excluding the epidemic period).

Yen

On Tuesday, Japan's producer price data will influence yen demand. If producer prices are higher than expected, it could indicate higher consumer price inflation and support a more hawkish interest rate path for the Bank of Japan (BoJ). Market expectations for a BoJ rate hike in the fourth quarter of 2024 could boost yen demand.

On Thursday, Japan's second-quarter GDP data will also need to be watched. The economy's return to growth could influence BoJ's interest rate policy. However, investors should also keep an eye on disaggregated data, including private consumption, which could influence inflation trends.

On Friday, the Reuters Short View Index will be of interest to the market. If the index unexpectedly rises, it could indicate an improving economy and support a BoJ rate hike in the fourth quarter of 2024, which in turn would boost demand for the Japanese yen.

In addition to the data, investors should keep an eye on the BoJ's comments, especially after the recent unwinding of the yen carry trade.

China

On Thursday, China's economic data will be the focus of the market, including house prices, retail sales, industrial production, unemployment and fixed asset investment. Weaker-than-expected data could indicate a weaker demand environment and slower economic growth in the third quarter.

However, weaker data could increase market expectations for the government to introduce fiscal stimulus measures, thus limiting the impact of weak data on global financial markets.