# Forex Major Currencies Outlook (Aug 3 – Aug 7, 2026) Source: https://www.tradersway.com/resources/market-info/forex-major-currencies-outlook-aug-3-aug-7-2026/ Language: en Updated: 2026-08-03 ## Week Ahead Summary Employment week as we get employment data from the US, New Zealand and Canada coupled with inflation data from Switzerland and ISM PMI data from the US. ![Forex Major Currencies Outlook (Aug 3 – Aug 7, 2026)] ## USD — US Dollar Over the weekend both US and Iran agreed to stop with military strikes and work towards finding a solution for the conflict. As a result WTI gaped down on the market open to $84 from $91 on Friday’s close. Iran launched missiles towards a US military base in Jordan and US retaliated by hitting Iran. Houthis are ruminating tolls on ships passing through the Red Sea. Fed has left rate unchanged at 3.50-3.75% range as was expected. The decision was 9-3 with Hammack, Kashkari and Logan voting for a 25bp rate hike stating concerns about higher inflation. The statement was short and it showed that economy continues to expand at a solid pace despite heightened uncertainty caused by the US-Iran war. They see productivity and investment as strong while labor market stays solid and there was a small change in the unemployment rate. The Committee reiterated that they will deliver price stability and return inflation to 2%. During the press conference Chairman Warsh acknowledged jump in nominal and real yields which shows that markets are taking central role instead of central banks. Markets are reacting in real time interpreting real economic data and they are increasing rates as a result of that, basically doing financial tightening for the Fed. Warsh also highlighted the role of business investment, specifically AI CAPEX, as the main driver behind the economic growth. He stated that there was vigorous discussion regarding four questions: 1. Inflation has been above the target for the past 5 years and what are the implications of that; 2. Effect of recent economic shocks on employment and output; 3. Do these shocks influence broader inflation dynamics; 4. What are the proper monetary tools and strategies. When asked about inflation measures Warsh stated that Fed uses PCE as an objective measure of inflation and added that he is looking at a broad measure of inflation data. This is disconcerting for the markets as they do not see a clear measure. Warsh reiterated that there is no soft target on inflation, the only target is 2%. Advanced reading of Q2 GDP came in at 1.5% vs 2.1% annualized as expected and in the previous quarter. GDP was driven by personal consumption which contributed 2.12pp to the reading. Business investment also positively contributed with 0.53pp but much lower than 1.37pp in the previous quarter. Both net exports and government spending deducted from the print as imports of materials for AI infrastructure build up surged. June PCE data showed both headline and core come in line with expectations at 3.7% y/y and 3.3% y/y respectively, down from 4.1% y/y and 3.4% y/y in May. Headline PCE declined 0.1% m/m while core rose just 0.1% m/m vs 0.2% m/m as expected and down from 0.3% m/m the previous month. Weaker PCE readings were telegraphed by weaker CPI and PPI readings that we got earlier this month. The yield on a 10y Treasury started the week at 4.69%, rose to 4.76% and finished the week at around 4.75%. The yield on 2y Treasury started the week at 4.35%, rose to 4.36% and finished the week at around 4.28%. As a result of an FOMC meeting the yield on a 30y Treasury surged to 5.27% which is the highest level since 2007. Spread between 2y and 10y Treasuries started the week at 34bp and finished the week at 47bp. FedWatchTool sees the probability of a no change at a September meeting at around 35% while probability of a 25bp rate hike is at around 65%. WTI prices started the week with a gap to $84 and then declined to $79 on positive talks from Iranian foreign minstry, only to reverse back and finish the week at around $86. Gold briefly fell below $4000 then bounced after FOMC meeting to $4100 and finished the week at around $4050. This week we will get ISM PMI data as well as July employment report on Friday. Headline number is expected to come at around 80k while the unemployment rate should stay at 4.2%. Important news for USD: *Monday*:​ - ISM Manufacturing PMI​ *Wednesday*:​ - ISM Services PMI​ *Friday*:​ - NFP​ - Unemployment Rate​ ## EUR — Euro First reading of Eurozone Q2 GDP showed economy grow by 0.4% q/q and 1% y/y much better than 0.2% q/q and 0.5% y/y as expected. Additionally, Q1 prints were revised up so now instead of showing negative growth it shows flat growth. German, French and Italian readings of Q2 GDP showed economies growing by 0.2% q/q with former beating expectations of a 0.1% q/q print. Spain also beat expectations and posted a 0.7% q/q growth in Q2. German Q1 prints were upwardly revised and now show 0.4% q/q and 0.7% y/y growth. Preliminary July inflation saw headline CPI at 2.9% y/y as expected and a tick up from 2.8% y/y in July. Core reading also ticked up to 2.5% y/y from 2.4% y/y while markets were expecting it to stay at 2.4% y/y. Energy prices pushed headline inflation while services inflation was the main reason for rise in core as it printed 3.3% y/y vs 3.2% y/y the previous month. German and Spanish prints showed renewed surge in inflation with former printing 2.8% y/y vs 2.7% y/y as expected and up from 2.3% y/y in June. The surge, 0.8% m/m, is due to renewed increase in energy prices which are now up 8.3% y/y. Core reading ticked down to 2.4% y/y from 2.5% y/y the previous month. French reading also rose and it moved above 2% with a 2.1% y/y print. ## GBP — British Pound BoE has left bank rate unchanged at 3.75% as was widely expected. The vote was 6-3 with Pill, Greene and Mann voting for a 25bp rate hike. The dissenting members feel that uncertainty due to the US-Iran conflict calls for more proactive approach and note that inflation has been above the target for more than five years. The statement shows that impact of energy shock on the UK economy remains uncertain and the longer it goes on the greater the chance of it having second-round effects. So far, however, there are no signs of those. They will remain data-dependent in order to get timely assessment of the inflation outlook. The central projection shows moderate and persistent second-round effects and sees CPI inflation at 2.6% in one-year time which is lower than all three scenarios presented in April. BoE Governor Bailey reiterated at the press conference that they do not see second-round effects from energy shocks and that price pressures are building at a slower pace than projected in April, a rather dovish comments. He continued by saying that he sees broader slowing in domestic inflation but added that they are prepared to hike if Middle East conflict persists and second-round effects appear. Bailey pointed to slower economic activity and softer labor market as contributors to the falling inflation. He clarified that the bank is not looking for insurance hikes thus adding more to the dovishness. ## AUD — Australian Dollar RBA Governor Bullock stated that key question is whether the bank has tightened enough to reign in inflation. She added that they are prepared to increase rates further in order to fight the inflation. Weakness in growth and labor market is expected in order to bring inflation down. Bullock hinted that August meeting will be a live one as it would depend on whether Board sees current monetary policy to be restrictive enough. Q2 CPI data saw easing in the headline number as it printed 0.6% q/q and 3.9% y/y vs 1.4% q/q and 4.1% y/y in the first quarter. Softer housing and transport costs were the main reason for lower prints. Other categories also showed declines or remained unchanged which indicates that there is a broader easing across the inflation basket categories. Core measure, trimmed mean, rose 0.8% q/q, same as in the previous quarter but lower than 0.9% q/q as markets expected and 3.6% y/y which is a tick up from 3.5% y/y in the first quarter but again lower than 3.7% y/y as expected. CPI for the month of June came in at -0.1% m/m. All numbers came weaker than expected so markets are pricing in no rate change at August meeting. Governor Bullock stated that monetary policy works with lags so that is additional reason to conclude that they will not change rates at the next meeting. However, inflation is still way above the bank’s 2-3% targeted range and services inflation rose to 4% y/y. Official PMI data from China for the month of July showed both manufacturing and non-manufacturing sectors dipping back into contraction with a 49.2 and 49 prints respectively. The report shows that production, new orders and new export orders all fell below the 50 level in manufacturing while those same indices fell deeper into contraction for non-manufacturing. They have dragged composite down into contraction which showed a 49.3 print. The reading points to a weak start of third quarter and second half of the year. ## NZD — New Zealand Dollar Consumer confidence in July surged to 99.3 from 91.3 in June. Future conditions have surged above 100 which represents a neutral ground for the first time since February as net 21% of households expect to be better of next year and economic outlook looks much better for the next year. NZD had a strong week as it gained ground on the back of RBNZ being the most hawkish central bank and continuing on a rate hiking path. This week we will have employment report for Q2. Important news for NZD: *Wednesday*:​ - Employment Change​ - Unemployment Rate​ ## CAD — Canadian Dollar CAD has had a quiet week with no news to make significant moves in the currency it has slowly moved within well-established ranges and declined against all of the majors apart from the USD against whom it managed to gain some ground after the FOMC meeting. This week we will have employment report for the month of July. Important news for CAD: *Friday*:​ - Employment Change​ - Unemployment Rate​ ## JPY — Japanese Yen BoJ has left rate unchanged at 1% as was widely expected. The vote was 8-1 with Takata the only dissenter who wanted a 25bp rate hike as he sees demand-driven risks to inflation. The statement shows that uncertainty is high and notes US – Iran war as the main driver of it. They will closely monitor developments in the Middle East in order to assess its impact on economy, inflation and currency. Outlook report showed real GDP for FY 2026 revised up to 0.6% from 0.5% in April and 0.8% for FY 2027 and FY 2028. Core CPI for FY 2026 has been lowered to 2.5%, but for FY 2027 it has been revised up to 2.4% while for FY 2028 it stayed unchanged at 2%. BoJ Governor Ueda stated at the press conference that economy is expected to keep growing moderately and added that they are prepared to further raise rates in response to economic and financial conditions. He warned that there is a risk of underlying inflation crossing the 2% target and reiterated importance of closely monitoring situation in Middle East. July inflation report for the Tokyo are saw headline and ex fresh food, energy CPI rose to 2% y/y from 1.7% y/y and 1.9% y/y respectively. Ex fresh food component, core, rose to 1.9% y/y from 1.6% y/y in June. Inflation pressures are picking up but are staying at or below bank’s 2% target. June retail sales saw a big drop of 4.1% m/m thus breaking the streak of three consecutive months of growth and posing questions about the health of Japanese consumer. The Nikkei reported that on Thursday evening Tokyo time MoF did an intervention in the markets which was coupled with a rate check from Fed. Combined with a post-Fed weaker USD it pushed USDJPY below the 160 level as pair dropped more than 3%. There were additional intervention-like moves on Friday which made new lows on all JPY pairs. The numbers are floated at around $59bn for Thursday intervention and a total of around %80bn for three-day intervention. ## CHF — Swiss Franc SNB total sight deposits for the week ending July 24 came in at CHF469.3bn vs CHF469.4bn the previous week. Virtually no change as SNB stopped pumping in Swissy liquidity since the start of the month and lets market dictate Swissy’s strength. Bloomberg has ran a story stating that insiders in SNB felt that policy rate will stay unchanged at 0% till the end of 2027. This would make Swissy preferred funding currency for carry trade. This week we will have inflation data expected to show a further increase in prices. Important news for CHF: *Monday*:​ - CPI You can follow all economic events on the [Economic Calendar](https://www.tradersway.com/resources/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](https://www.worldtimebuddy.com/). 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.