Forex Major Currencies Outlook (Aug 17 – Aug 21, 2026)

Week Ahead Summary

FOMC minutes, preliminary August PMI data from Eurozone and the UK, inflation data from the UK and Canada, Q2 GDP from Japan, employment data from the UK and Australia as well as industrial production and retail sales data from China will highlight the busy week ahead of us.

USD — US Dollar

July inflation report came in line with expectations with headline CPI ticking down to 3.4% y/y from 3.5% y/y in June while core CPI ticked down to 2.5% y/y from 2.6% y/y the previous month. Energy prices dropped 1.5% m/m with gasoline showing a 2.9% m/m decline. Airfares were the biggest contributor to the reading rising 2.2% m/m, due to higher jet fuel prices, and leading to a 0.1% m/m rise in headline CPI, as expected.. On the core side we had a 0.2% m/m increase as expected with shelter, the biggest component of CPI, increasing 0.1% m/m and 3.2% y/y. Core CPI services ex shelter rose 0.2% m/m after a small decline in June due to medical services rising 0.4% m/m vs -0.1% m/m the previous month. Supercore came in at 0.277% m/m, which is over 3% annualized, but it came in at 1.92% y/y signalling success. Inflation is slowly dripping towards the Fed’s target which will take away the need for rate hikes.

Retail sales report for the month of July showed weaknesses across the board as headline number came in at -0.6% m/m after a 0.2% m/m in June. The biggest drop was seen in nonstore retailers, online, which fell 2.2% m/m and could be attributed to the fact that Amazon Prime Day was last month, followed by a drop of 1.8% m/m in motor vehicle and parts dealers. Growth was seen in clothing stores at a tune of 1.9% m/m. Control group, used for measuring of GDP, came in at -0.4% m/m. Ex autos and ex autos and gas categories declined by 0.3% m/m and 0.2% m/m respectively. One positive is that food services and drinking places, a good proxy for discretionary spending, rose 0.5% m/m. Fiscal deficit continued to expand and is now at $432bn in July, almost 50% higher than $291bn seen in July of last year.

The yield on a 10y Treasury started the week at 4.65%, rose to 4.74% and finished the week at around 4.68%. The yield on 2y Treasury started the week at 4.21%, rose to 4.27% and finished the week at around 4.17%. Spread between 2y and 10y Treasuries started the week at 45bp and finished the week at 51bp. After the CPI report where odds were 50/50 FedWatchTool sees the probability of a no change at a September meeting at around 66% while probability of a 25bp rate hike is at around 34%. WTI prices did not move as much as in previous weeks and finished the week at around $82.50. Gold’s rise stalled at around $4450 and finished the week at around $4375. AI trade has returned in full force and caused S&P to reach new ATH.

This week we will have minutes from July FOMC meeting. We had three dissenters at this meeting so it will be valuable to get more information in the discussion that was going on.

Important news for USD:

Wednesday:​

• FOMC Minutes​

EUR — Euro

Final inflation numbers from Germany for the month of July saw headline CPI remain at 2.8% y/y as preliminary reported, jumping from 2.3% y/y in June due to surge in energy prices. Core CPI, on the other hand, ticked down to 2.4% y/y. Services inflation came in at 2.9% y/y, down from 3.1% y/y the previous month, but still elevated. French reading also saw confirmation of preliminary print of 2.1% y/y but core reading jumped to 1.3% y/y from 1% y/y in June. Italy and Spain inflation came in higher than preliminary reported.

This week we will have preliminary August PMI data.

Important news for EUR:

Friday:​

• Manufacturing PMI (Eurozone, Germany, France)​

• Services PMI (Eurozone, Germany, France)​

• Composite PMI (Eurozone, Germany, France)​

GBP — British Pound

Preliminary reading of Q2 GDP showed a growth of 0.4% q/q, in line with expectations, with a 1.2% y/y growth vs 1.1% y/y as expected. The report shows that growth was led by services sector which rose 0.5% followed by construction with 0.3% growth. Real final household consumption rose by 0.3% while government spending fell by the same amount. Business investment grew by 1.7% while both export and import volumes grew by 0.5%. June growth surprised to the upside, coming in at 0.3%, and that helped push Q2 reading.

This week we will have employment and inflation data with latter expected to increase due to higher energy prices as well as preliminary August PMI data.

Important news for GBP:

Tuesday:​

• Payrolls Change​

• Unemployment Rate​

Wednesday:​

• CPI​

Friday:​

• Manufacturing PMI​

• Services PMI​

• Composite PMI​

AUD — Australian Dollar

RBA has left its cash rate at 4.35% as was widely expected. The decision was unanimous. The statement shows that although effects from the Middle East conflict were less than expected inflation still remains too high. This year’s three rate hikes are tightening financial conditions and it is reflected in gradual slowing of consumer spending. Additionally, as a result of previous rate hikes, the economy is slowing down. The statement also warns that period of prolonged uncertainty may also lower the growth. Inflation is not expected to come down to midpoint of targeted range until late 2027 and there are upside risks to that projection. The board will continue monitoring developments and are standing ready to further raise cash rate if necessary.

RBA Governor Bullock reiterated that there are upside risks to inflation and added that they are prepared to deliver further rate hikes if data calls for it. She clarified that there was no talk of rate cuts at this meeting. The discussion was whether to hold or hike rates which gives it a more hawkish tone as there was no discussion about hiking at the previous meeting.

Chinese inflation data for the month of July showed CPI at 0.5% y/y vs 0.8% y/y as expected and down from 1% y/y in June. The report shows a plunge in transportation fuel to just 0.8% y/y from 15.% y/y the previous month. The weakness is also seen in food and rent categories. PPI rose 3.5% y/y, slower than 3.9% y/y market has expected and down from 4.1% y/y seen in June.

This week we will have employment data from Australia as well as industrial production and retail sales data from China.

Important news for AUD:

Monday:​

• Industrial Production (China)​

• Retail Sales (China)​

Thursday:​

• Employment Change​

• Unemployment Rate​

NZD — New Zealand Dollar

RBNZ’s Q3 survey of inflation expectations survey showed 1-year expectations for Q3 of 2026 at 2.6%, down from 3.4% seen in Q2. The 2-year expectations are at 2.3%, down from 2.5% seen in the previous quarter. Easing of inflation pressures lowers the chance of another rate hike in September, but it does not rule it out completely, and Kiwi is suffering as a result of it.

CAD — Canadian Dollar

June building permits growth surged 18.5% m/m after declining 3% m/m in May. The surge was led by non-residential building permits, 37.5%, of which institutional permits surged 90.2%. Residential permits rose at a healthy pace of 6.3% m/m. CAD has gained strength and pushed USDCAD below the 1.39 level.

This week we will have July inflation data expected to decline further.

Important news for CAD:

Monday:​

• CPI​

JPY — Japanese Yen

BoJ Summary of Opinion from July showed that policymakers are increasingly worrisome of inflation overshooting their target. They have noted weak JPY, leading to higher import prices, strong AI demand and high energy costs caused by the US – Iran war as the main reasons for higher inflation risks. This report indicates that we should see greater chance of a September hike although markets are not yet pricing it in as JPY continues to weaken.

This week we will have preliminary Q2 GDP data.

Important news for JPY:

Monday:​

• GDP​

CHF — Swiss Franc

SNB total sight deposits for the week ending August 7 came in at CHF462.4bn vs CHF465.2bn the previous week. This makes it fifth consecutive week of declines as SNB stopped injecting liquidity into the markets as they are satisfied with where Swissy is heading. First estimate of Q2 GDP show that economy grew at a healthy pace of 1.5% q/q.

You can follow all economic events on the Economic Calendar page on our Website. MT server time is set to GMT+3 and if you need assistance converting MT server time to your local time you can use some of the online time converters such as WorldTimeBuddy.

Please note that this analysis should not be used as investing advice as it is only an overview of the economic events influencing the markets. Please remember that our accounts have Market Execution. Please note how Execution works during high impact news and other times of low liquidity.