The week of 26th-30th August 2024

Last week, Euro Area CPI data remained flat at 2.9% y.o.y for July, Canadian inflation fell, US Non- Payrolls posted a staggering fall of -818,000 in its annual revision of jobs created, FOMC minutes stated job gains have moderated and the unemployment rate has moved up. ECB minutes acknowledged that the short-term outlook for growth had deteriorated while inflation had remained persistent, and Fed Chair Powell suggested that “The time has come for policy to adjust” in his statement at Jackson Hole. Japanese inflation remained at 2.8% y.o.y in July.?

And so, in a quieter week for FX markets we are setting ourselves up for a flurry of central bank interest rate cuts in September, the key one which will be the US on September 18. Until then we will see some market adjustment as market participants set themselves up for a broad easing of policy save for Japan which is slightly out of sync with the rest of the market,?

We have a batch of German and US data this week starting on Monday with the German IFO Business Climate Index for August which is expected to be slightly gloomier at 86.5 vs 87 for July. US Durable Goods Orders in the afternoon is likely to be much more positive at +4% for July vs -6.6% previously.?

German GDP is expected to be in the doldrums at -0.1% y.o.y for the second quarter when it is released on Tuesday. US Consumer Confidence is forecast to remain above 100.?

On Wednesday, first up, we receive a monthly gauge of Australian inflation. This has been receding and hopes are for a print of 3.4% in July from 3.8% in June. German Consumer Confidence should also be less negative at -17.5 for September vs -18.4 in August.?

Thursday’s big events are German inflation metrics, with expectations for a fall in the Headline inflation rate to 2.1% y.o.y for August and US Q2 GDP q.o.q figures which are set to show an improvement to 2.8%.?

Friday should be quite an active day. First up German employment numbers with the unemployment rate set to stay at 6%. Euro Area Core inflation up next is expected to decline to 2.8% y.o.y for August. Canadian GDP and US PCE numbers will both be released at 13.30pm UK time. Last time out Canadian GDP printed 1.7% q.o.q annualized. PCE is the number Fed watchers will be waiting for. Hopes will be for a drop from 2.6% Core and 2.5% Headline, but whatever the number, a rate cut from the Fed in September is a fait accompli. Michigan Consumer Sentiment for August is the last data release of high importance on Friday. It is anticipated to rise to 67.8 from July’s 66.4.?

Plenty to look forward to with G7 and crosses likely to be active this week.?

Good Luck and Good trading!

Ben Robson?

Ben Robson is Head of Institutional E-FX at Swiss Finance Corporation. He is also the Amazon Best Selling Author of Currency Kings – How Billion traders Made their Fortune Trading Forex. McGraw Hill