Forex week in review 29/2026: a soft CPI, Warsh on the Hill and oil back near $90

The short version: the most important number of the week was a big downside surprise, and the market treated it with suspicion. US consumer prices fell 0.4% in June and core inflation did not rise at all, against forecasts of a 0.1% fall and a 0.3% rise. The dollar slipped, with the Dollar Index losing about 0.3% on the week on Yahoo Finance data. But the war in the Gulf had flared up again, oil was climbing back towards $90 a barrel, and Fed Chair Kevin Warsh told Congress that one good month was not "mission accomplished". The Canadian dollar, backed by oil and a steady Bank of Canada, was the best-performing major against the US dollar among those we track.

As always, weekly figures come from Yahoo Finance hourly data, from the Sunday evening open to the Friday 5pm New York close. Other feeds will differ by a few pips.

Where we left off

Last week the US–Iran ceasefire collapsed, the Reserve Bank of New Zealand surprised with a hike to 2.50%, and sterling reached a three-week high as Andy Burnham collected 322 MP nominations on the first day of the Labour leadership contest. The Dollar Index barely moved. Catch up with forex week in review, 6–10 July 2026.

Going into this week, the CME FedWatch tool put the probability of a Fed hike at the 29 July meeting at around a third, and the market knew the June CPI report and Warsh's first testimony would test that.

The weekend and Monday 13 July: Hormuz closed again

The conflict escalated over the weekend. On Sunday 12 July, according to a Reuters report carried by Offshore Engineer, Tehran targeted US facilities across the Gulf and said it had again closed the Strait of Hormuz, after a vessel was struck for using an unauthorised route. On Monday, Iran's Revolutionary Guards said they had attacked US military bases in Kuwait and Bahrain. Only six vessels transited the strait on Sunday, a five-week low, according to Kpler data. President Trump said the strait remained open to commercial traffic.

Oil opened sharply higher. By early Monday in Europe, Brent was up 3.5% at $78.68 a barrel. After President Trump announced plans to reimpose a blockade, Brent futures finished the day up nearly 10%, according to Yahoo Finance. Before the war began in late February, the strait handled about a fifth of global daily oil and LNG supplies.

Fed Governor Christopher Waller said on Monday that rates may need to rise if underlying inflation keeps pressuring the economy. The dollar firmed on Monday, with USD/CHF and USD/JPY both higher, and the Dollar Index reached its weekly high of about 101.33.

Weekend gaps

A geopolitical event that happens on a Sunday is a particular risk for anyone holding positions over the weekend. Forex does not trade on Saturday and Sunday, so the first price on Monday can be far from Friday's close. Stop-loss orders cannot protect you inside that gap: they are triggered at the first available price, which may be well beyond your stop level. Our guide to slippage explains why, and our order types guide covers how different stop orders are filled, including the fixed-price stops some brokers offer for an extra charge.

Tuesday 14 July: the CPI surprise

By Tuesday morning, Brent was trading at about $87 a barrel. The CME FedWatch probability of a July hike had edged up to 36.9% from 33.7% a day earlier, according to RTTNews.

Then the inflation data landed. From the Bureau of Labor Statistics:

• Headline CPI fell 0.4% in June. FXStreet's preview had the consensus at -0.1%.
• Annual CPI inflation fell to 3.5% from 4.2%.
• Core CPI (excluding food and energy) was unchanged on the month. The consensus was +0.3%.
• Annual core inflation fell to 2.6% from 2.9%. The consensus was 2.9%.
• Energy prices fell 5.7% on the month, with gasoline down 9.7%.

That is a large miss. The fall in energy prices made sense: June was the month of the ceasefire, when oil and petrol prices dropped. But core inflation, which strips out energy, was also much weaker than expected. Our guide to how economic data moves forex explains why the gap between actual and consensus, not the level, drives the reaction.

Warsh at the House

Fed Chair Kevin Warsh began his semiannual monetary policy testimony before the House Financial Services Committee the same day. His key lines, as reported by Yahoo Finance:

• "We are committed to the 2% inflation goal."
• The Fed would "have no tolerance for persistently elevated inflation".
• "Some might say today's data means mission accomplished. That's not my view."
• "My commitment to you is to follow the law and follow the data."

He gave little forward guidance, saying that tying policy too closely to guidance when conditions change was "not the way we want to do things". He also announced five task forces, including one on inflation.

The dollar weakened. On Yahoo Finance data, the Dollar Index fell from about 101.28 to 100.94 on Tuesday. GBP/USD and EUR/USD both rose.

Why the market did not go further

A 0.3 percentage point miss on core CPI would, in a calm world, be enough to take a rate hike off the table altogether. It did not do that, for two reasons. First, the inflation data described June, when the ceasefire held and oil was falling. By the time it was published, oil had jumped again. Second, Warsh made clear he would not treat one month as a trend. Traders were being asked to weigh an old good number against a new bad oil price, and many chose to wait.

Wednesday 15 July: Warsh at the Senate, Canada and China

More testimony

Before the Senate Banking Committee, Warsh said: "Any central bank would be happy to have the data going in the right direction." According to CNBC, he argued that a price shock from the Iran war was not necessarily inflation the Fed could control, and that the Fed's job was to control inflation in the medium term. Fed Governor Lisa Cook said in a separate speech that inflation risks now outweighed employment risks. CNBC also reported that June producer prices fell 0.3%.

The Dollar Index fell to its weekly low of about 100.35 on Wednesday, on Yahoo Finance data.

Bank of Canada holds

The Bank of Canada held its policy rate at 2.25%, its sixth consecutive hold. It dropped language from June that had signalled consecutive rate increases could be needed if inflation spiked. The Canadian dollar still rose 0.2% to 1.4032 per US dollar, its strongest level since 17 June, which the report put down mainly to US dollar weakness. Oil fell 0.5% to $78.95 on the day. Swaps priced about 15 basis points of Bank of Canada tightening by December, down from 17 before the decision.

China slows

China's National Bureau of Statistics reported second-quarter GDP growth of 4.3% year on year, down from 5.0% in the first quarter and just below the 4.4% FXStreet had listed as the forecast. Growth over the first half was 4.7%. June retail sales rose 1% after a 0.6% fall in May, and industrial output grew 5.3%. Fixed-asset investment fell 5.7% in the first half.

The Australian dollar, often used as a proxy for Chinese demand, shrugged it off. AUD/USD was back above 0.70 on Wednesday, helped more by the weaker US dollar than hurt by China.

Thursday 16 July: UK GDP, US retail sales, nominations close

UK GDP grew 0.1% in May, in line with expectations, after a 0.1% contraction in April, according to Trading Economics. Services grew 0.3% while production fell 0.5% and construction 0.8%.

US retail sales rose 0.2% in June, slightly below the 0.3% expected, with May revised up to 1.0%, according to RTTNews.

Labour leadership nominations closed with Andy Burnham the only candidate. GBP/USD reached a two-month high of about 1.354, according to Trading Economics.

Friday 17 July: Burnham confirmed, oil at a one-month high

Burnham was officially confirmed as Labour leader after an uncontested race and was expected to become Prime Minister the following week. In his first speech as leader he said Labour was united. Reports named Shabana Mahmood as the frontrunner to be Chancellor, which Trading Economics said reassured investors worried about a more expansionary fiscal stance. Markets fully priced a Bank of England rate hike by the end of the year.

Sterling slipped below 1.345 as the news was digested. This is a classic case of buying the rumour and selling the fact: the pound had rallied for three weeks as Burnham's path cleared, so the confirmation itself brought some position squaring.

Escalating tensions in the Middle East pushed oil to one-month highs, and WTI was trading near $82 a barrel on Friday, up almost 3% on the day, according to FXStreet. Gold futures fell to their weekly low of $3,963 before recovering slightly to close at $4,018.80.

Pair by pair

EUR/USD: +0.38%

The euro rose to 1.1484 after the CPI miss and the dovish read of the testimony, then gave back some ground into the weekend as oil climbed. The eurozone is a large energy importer, so an oil spike is a drag on the euro.

GBP/USD: +0.59%

A third consecutive weekly gain, taking the pair from 1.3195 at the end of June to 1.3454. Political certainty plus a softer dollar did most of the work.

USD/JPY: +0.21%

The yen weakened in a week when US inflation and Treasury yields both fell. Why? Japan imports almost all of its oil, so an oil shock worsens its trade balance and weighs on the currency. Japanese government bond yields also dipped on Tuesday, according to RTTNews. The pair closed at 162.35, not far from the 40-year high it set in early July.

AUD/USD: +0.63%

Back above 0.70 midweek for the first time since late June. A softer US dollar and higher commodity prices outweighed slower Chinese growth.

USD/CAD: -1.07%

The loonie was the standout. Canada is a major oil exporter, so higher crude prices tend to support the Canadian dollar, and the Bank of Canada's hold did nothing to undo that. USD/CAD fell from 1.4169 to 1.4018, its lowest weekly close since mid-June.

Gold: -1.93% (futures)

The surprise of the week. A softer dollar and a war that was escalating again should both have helped gold. It fell instead. The most likely explanation is that the oil spike revived the inflation and rate-hike story, and gold, which pays no interest, suffers when expected rates rise. It is a reminder that gold reacts to real interest rates at least as much as to fear.

A worked example: a 151-pip loonie move

USD/CAD fell 151 pips over the week. Here is how that translates into money, using illustrative numbers.

• One standard lot of USD/CAD is $100,000. A pip is 0.0001 Canadian dollars, so each pip is worth 10 Canadian dollars.
• At 1.4018, 10 Canadian dollars is about $7.13. So 151 pips on one lot is about 1,510 Canadian dollars, or roughly $1,077.
• With ESMA's 30:1 limit on major pairs, one lot needs about $3,333 of margin. A trader long USD/CAD from Monday's open would have lost about a third of that margin.
• With a $5,000 account and 1% risk per trade ($50), a 60-pip stop allows about 0.07 lots. The same move would have cost $50 once the stop was hit, assuming no slippage.

The pip value depends on the quote currency, which is why our guide to what a pip is is worth reading before trading pairs like USD/CAD or USD/JPY. And the position sizing guide shows the calculation step by step. Most retail CFD accounts lose money, with broker disclosures typically between 61% and 89%, and leverage magnifies losses on moves like this one.

What this week teaches

1. Data is a picture of the past

June's inflation was soft because June was calm. July was not. Traders who reacted only to the CPI number were reacting to a world that had already changed. Always ask what period the data covers and what has happened since.

2. A central bank chair can blunt a data surprise

Warsh did not push back hard on the CPI number, but he did not celebrate it either. When a central bank refuses to give forward guidance, the market has to guess, and that usually means smaller, choppier moves. Our guide to central banks and interest rates explains how forward guidance works and why it matters.

3. Oil sorts currencies into winners and losers

The Canadian dollar (an exporter) rose; the yen and the euro (importers) lagged. When oil moves a lot, it is worth knowing which side of the trade each currency sits on. The currency pairs guide covers commodity currencies.

4. Weekend risk is real

The weekend strikes moved oil before forex markets opened. If you hold positions over a weekend during a conflict, size them for a gap, not for your stop-loss. Our guide to where to put a stop-loss discusses why a stop limits risk but cannot fix the price you get.

Scheduled next week (20–24 July)

These are scheduled events only; we do not forecast their effect on prices.

• Monday 20 July: Keir Starmer due to hand over to Andy Burnham as Prime Minister. The People's Bank of China's rate decision is due on Sunday 19 July.
• Tuesday 21 July: UK labour market data and the German ZEW survey.
• Wednesday 22 July: UK CPI inflation for June.
• Thursday 23 July: the European Central Bank's policy decision and press conference, and US weekly jobless claims.
• Friday 24 July: flash PMI surveys for July in the US, eurozone and UK, and UK retail sales.
• Later in the week: Japan's national CPI.

Next recap: forex week in review, 20–24 July 2026. Our risk warning explains the risks of trading leveraged products in more detail.

Sources

• US Bureau of Labor Statistics: Consumer Price Index, June 2026
• Yahoo Finance: "We are committed to the 2% inflation goal," Warsh tells House lawmakers
• CNBC: Fed Chairman Warsh faces an inflation credibility test after Congress hearings
• FXStreet: Forecasting the upcoming week, US CPI and Warsh testimony
• FXStreet: Forecasting the coming week, ECB decision, UK inflation and global PMIs
• RTTNews: War-weary markets wait for CPI, Warsh
• Offshore Engineer: Oil jumps 3% on renewed US-Iran conflict
• Benefits and Pensions Monitor: BoC holds at 2.25% as Canadian dollar climbs to four-week high
• China Daily: China's economy grows 4.7% in H1
• Trading Economics: UK economy returns to growth in May
• RTTNews: U.S. retail sales rise 0.2% in June
• Trading Economics: Sterling eases as Burnham takes over
• Yahoo Finance: EUR/USD historical data (also GBPUSD=X, JPY=X, AUDUSD=X, USDCAD=X, GC=F, DX-Y.NYB)