Can the dollar see one-directional price action with this week’s catalysts? Here are events you should pay attention to.
CPI reports (Aug 13, 1:30 pm GMT)
Consumer prices rose by 0.1% in June, the same pace as in May and a bit under analysts’ estimates of a 0.2% gain.
What caught traders’ attention was the core CPI that clocked in at 0.3%. It was larger than the 0.2% uptick that many had expected and marked the fastest increase since January 2018.
Since everyone and his momma were already pricing in a rate cut from the Fed, the better-than-expected core CPI figure helped mark the bottom for the dollar.
This week market geeks see the headline CPI come in at 0.3% for the month of July. The core figure, which will likely be more closely watched than the headline rate, is estimated at 0.2% after last month’s 0.3% gain.
Significantly weaker consumer price increases will likely add pressure on the Fed to implement “bigger and faster” rate cuts than Powell and his team are planning. And if past price action is any indication, this could mean further losses for the dollar.
Retail sales (Aug 15, 1:30 pm GMT)
Retail trading gained 0.4% from a month earlier in June, which was in line with May’s growth and faster than the 0.1% uptick that market geeks had expected.
The core figure, which includes volatile items such as automobiles and gasoline, jumped by 0.4% after seeing a 0.4% increase in May.
Like in the CPI release, the better-than-expected retail sales report helped boost the dollar against its major counterparts.
This time around analysts see headline retail sales taking a chill pill and only growing by 0.2%. The same can’t be said of the core figure, though, which is expected to maintain its 0.4% reading.
Note that Uncle Sam has a boatload of lower-tier reports scheduled during the same trading session. This means that, unless the retail sales numbers cause intraweek retracement or reversal for the dollar, then we’ll likely see limited or choppy price action during the trading session.
Missed last week’s price action? Read USD’s price recap for August 2 – 5!