FX Week Ahead Overview:
- The second week of August sees a much leaner economic calendar – there are less than ten ‘high’ rated data releases and events.
- Both German and US inflation data should pave the path to rate hikes of at least 50-bps from the European Central Bank and the Federal Reserve in September.
- UK GDP figures are expected to show signs of further deceleration, if not outright contraction.
For the full week ahead, please visit the DailyFX Economic Calendar[1].
08/09 TUESDAY | 11:00 GMT | MXN Inflation Rate (CPI) (JUL)
Price pressures continue to increase in the world’s 15th largest economy. July Mexican inflation figures due this week are expected to show headline price pressures reaching +8.13% y/y from +7.99% y/y in June, according to a Bloomberg News survey. This would be the fastest pace of inflation in more than 21 years. Banxico is primed to respond, with economists surveyed projecting a 75-bps rate hike on August 11, bringing its main rate to 8.5%, a fresh record high. Promises of additional policy tightening may help the Mexican Peso continue its recent stretch of success versus the Canadian and US Dollars.
08/10 WEDNESDAY | 06:00 GMT | EUR German Inflation Rate (HICP) (JUL F)
The final July German inflation report is expected to show a slight downtick in inflation pressures, but not material enough to suggest that the European Central Bank’s interest rate hike cycle is anywhere near finished. The revision is expected to see headline German inflation come in at +7.5% y/y from an initial reading of +7.6% y/y, well-above the ECB’s price stability target of around +2%. As such, September ECB rate[2] hike odds could crystallize further, which are currently residing at an 88% chance of a 50-bps
