Market outlook for the week of Twenty fourth-Twenty eighth August

The week starts off slow with no major economic events for the FX market scheduled for Monday. The following day Japan will release the BoJ core CPI y/y, while the U.S. will publish the CB consumer confidence and new home sales data.

Wednesday will bring Australia’s CPI data and in the U.S., the focus will shift to the core PCE price index m/m, preliminary GDP q/q, and durable goods orders m/m. The U.S. data releases will continue Thursday with the unemployment claims and the day will also mark the start of the Jackson Hole Economic Policy Symposium.

On Friday, Japan will release the Tokyo core CPI y/y, while Canada will publish GDP m/m. Attention will then turn to Fed Chair Kevin Warsh, who is scheduled to speak at Jackson Hole. Another important release to consider will be the preliminary benchmark payroll revision for U.S. nonfarm payrolls.

In Australia, the consensus for the CPI m/m print is 0.9%, compared with the prior -0.1%. CPI y/y is expected at 3.3%, down from 3.8%, while the trimmed mean CPI m/m is forecast at 0.3%.

Last month’s CPI data came in better than expected, dropping for the second month in a row. The trimmed mean also improved on a monthly basis, although the annual rate edged higher to 3.6%.

For July, a rebound in monthly inflation is expected, while the annual rate is forecast to decline. Westpac analysts argue that holiday-related travel, higher fuel prices, and stronger domestic services costs following the minimum wage increase are likely to drive the monthly rise. This will be partly offset by lower electricity prices.

Inflation remains a concern, with signs of renewed increases in both input costs and selling prices. The RBA gained some breathing room following the June print, but inflation expectations have since picked up which keeps the possibility for a rate hike at the September meeting open especially if domestic demand proves resilient.

In the U.S., the consensus for the core PCE price index m/m is 0.2%, compared with the prior 0.1%. Personal income m/m is expected at 0.2% vs. 0.2% previously, while personal spending m/m is forecast at 0.1% compared to 0.3%.

Consumer spending appears to have remained resilient in July. While headline retail sales were soft, much of the weakness came from lower gasoline prices and a sharp decline in online sales, likely linked to Amazon Prime Day being moved to June. Excluding these effects, the underlying demand for goods remained positive and above the average pace of the past six months, Wells Fargo analysts said.

The boost from larger tax refunds is now fading, so household spending will increasingly depend on income growth in the months to come. Nominal personal income is expected to increase by 0.3% in July, while real disposable income should continue to improve gradually if labor market conditions remain stable.

Inflation is also expected to remain relatively stable. Wells Fargo forecasts headline PCE to rise by 0.1% m/m, bringing the annual rate down to 3.6%, while core PCE is expected to increase by 0.2% m/m and remain at 3.3% y/y. Recent CPI and PPI data continues to point to a gradual moderation in underlying inflation pressures.

In Canada, the consensus for GDP m/m is 0.2%, compared with the prior 0.3%. The country’s economy is expected to have rebounded strongly in Q2, with quarterly growth tracking above a 3% annualized pace.

The improvement appears broad-based, supported by stronger trade, consumer spending, business investment, and housing activity. Some of that strength reflects a recovery from earlier disruptions, particularly in the auto sector, and is unlikely to be sustained.

Growth is therefore expected to moderate in Q3, although early indicators remain supportive and the outlook for the rest of 2026 is still positive despite ongoing trade uncertainty.

Attention on Friday will turn to the Jackson Hole Symposium, where Fed Chair Kevin Warsh is scheduled to speak, although those hoping for a clear policy signal may come away disappointed.

Warsh is unlikely to provide detailed guidance on how the Fed would respond to incoming data in the near term, given the divided FOMC and the fact that another round of inflation and employment data is still due before the September meeting. Instead, the speech could focus more on broader questions around the Fed’s policy framework, balance sheet and communications strategy.

Recent softer labor market data, cooler inflation, and weaker retail sales and consumer confidence figures have also reduced the urgency around the next policy move.

Traders will also be watching the preliminary payroll benchmark revision, with the 2026 adjustment expected to be far smaller than last year’s 911K downward revision. Current estimates point to a reduction of around 100K jobs, although there is also a possibility that the March 2026 payroll level could be revised higher according to Wells Fargo.

The Quarterly Census of Employment and Wages (QCEW) employment data, which is more accurate but slower to produce than Bureau of Labor Statistics (BLS) survey figures, have tracked the published nonfarm payroll figures relatively closely through late 2025, helped by improvements in BLS’ methodology. However, weak survey response rates and the general tendency for preliminary Q1 QCEW estimates to be revised higher remain potential sources of uncertainty.