Rabobank's Senior Macro Strategist Bas van Geffen highlights a busy week for US Dollar traders, with a focus on the upcoming June Consumer Price Index (CPI) report, multiple Federal Reserve speakers, and the first Congressional testimony of new Fed Chair Warsh. The June CPI is expected to ease to 3.8% year-on-year, down from 4.2%, while core inflation is projected to moderate slightly to 2.8% according to Rabobank's estimates. For those preferring alternative inflation measures, the Cleveland Fed’s trimmed-mean estimate will also be available [1].
Fed Chair Warsh is scheduled to testify before the House Financial Services Committee, with additional remarks expected from Fed officials Barr, Goolsbee, Cook, and Bowman. These appearances are likely to provide further insight into the Fed's policy outlook. In addition to the CPI, the US data calendar includes producer price inflation and retail sales for June, both of which are closely watched indicators for the US Dollar [1].
Internationally, Wednesday will see the release of Eurozone industrial production data for May and a Bank of Canada rate decision. Rabobank expects the Bank of Canada to keep its overnight rate unchanged at 2.25%, a view shared by the majority of market participants, with only one out of 21 Bloomberg-surveyed strategists predicting a 25 basis point hike [1]. Thursday’s schedule features UK monthly GDP estimates and further US retail sales data, alongside remarks from Fed officials Musalem, Logan, and Schmid [1].
The combination of key inflation data, central bank commentary, and retail sales figures is expected to drive US Dollar sentiment in the coming days, with traders closely monitoring any signals regarding the future path of monetary policy [1].
CONCLUSION
The US Dollar faces a pivotal week as traders digest June CPI data, Fed Chair Warsh's testimony, and a series of important economic releases. Market participants are expected to react to any surprises in inflation or policy guidance, with the overall tone remaining cautious ahead of these events.