This week’s macro events will focus on central bank policy, inflation and economic growth. The Reserve Bank of Australia is expected to leave interest rates unchanged, while the US CPI data will shape expectations for future Federal Reserve policy. The week concludes with the eurozone GDP figures, providing fresh insight into the strength of the area’s economic recovery and the likely direction of ECB monetary policy.
AUD: Australia Interest Rate Decision
August 11, 07:30 MT time
Forecast: 4.35% | Previous: 4.35%
The Reserve Bank of Australia is widely expected to keep the rate unchanged at 4.35%, extending its pause as inflation continues to moderate while remaining above the central bank’s target. The officials face a delicate balance between underlying price pressures and signs of slowing domestic demand. Consequently, markets will attach greater significance to the accompanying statement than to the decision itself, seeking guidance on whether the RBA still considers additional tightening bias possible.
A more hawkish synergy of inflation and labor market conditions would support AUDUSD. Conversely, a softer tone suggesting confidence that inflation is returning sustainably to target would reinforce expectations of future rate cuts, weighing on the national currency.
Affected instruments: AUDUSD, EURAUD, GBPAUD, and other AUD-pairs
USD: US Consumer Price Index (CPI) YoY
August 12, 15:30 MT time
Forecast: 3.5% | Previous: 3.5%
The July CPI report remains the most influential macroeconomic release, as it will shape expectations regarding the Fed’s next policy steps in September. Consensus forecasts annual inflation to remain unchanged, implying that price pressures continue to ease just gradually.
Any upside surprise could reinforce expectations that rates would remain restrictive for longer, supporting the USD and increasing pressure on precious metals. On the contrary, a weaker reading would strengthen expectations of policy easing later this year, supporting risk-sensitive assets. Particular attention will also be paid to the core inflation components, which remain the Federal Reserve’s preferred measure of underlying price dynamics.
Affected instruments: EURUSD, GBPUSD, USDJPY, and other USD-pairs
EUR: Eurozone Gross Domestic Product (GDP) YoY
August 14, 12:00 MT time
Forecast: 0.7% | Previous: 1.0%
The estimate of the eurozone’s annual GDP growth is expected to confirm a serious slowdown in economic activity, with growth forecast to decelerate from 1.0% to 0.7%. The weaker outlook reflects subdued industrial production, soft investment and fragile consumer demand across much of the currency bloc. Although revisions to that outlook are hardly possible, any unexpected change could materially affect expectations for future ECB policy.
Beating figures would ease concerns over the eurozone’s economic outlook, supporting the euro and reducing expectations of additional monetary easing. Conversely, weaker data would reinforce expectations of further ECB accommodation, highlighting constant structural weakness and increasing downward pressure on the single currency.
Affected instruments: EURUSD, EURGBP, EURJPY, and other EUR-pairs
