Forex week in review 33/2026: CPI, Retail Sales Slump

US CPI matched forecasts at 3.4%, producer prices undershot and July retail sales fell 0.6%, cutting the odds of a September Fed hike to around 30%. The RBA held at 4.35%, USD/JPY climbed back above 159 and the dollar ended a choppy week slightly weaker.

Pair	Open	Close	Change	Note
EUR/USD	1.1559	1.1573	+0.12%	Tight 74-pip range; Friday’s data lifted it off the lows
GBP/USD	1.349	1.3536	+0.34%	UK Q2 GDP in line at 0.4%; week high 1.3562
USD/JPY	157.92	159.31	+0.88%	Gave back a large part of the intervention gains; high 159.57
USD/CAD	1.3945	1.3872	-0.52%	Loonie among Friday’s strongest after the US retail miss
AUD/USD	0.7068	0.7087	+0.27%	RBA hawkish hold at 4.35%
Gold (COMEX futures)	4398	4437.3	+0.89%	Consolidated after the prior week’s 6.5% surge; high $4,509

After two weeks dominated by currency intervention and a negative payrolls print, this was a week for inflation and consumer data. US consumer prices came in exactly as forecast, producer prices were softer, and retail sales fell sharply. The net effect was a big drop in the odds of a Federal Reserve rate hike in September. The dollar, however, did not fall as much as you might expect: it actually rose on CPI day and finished the week only slightly weaker. Meanwhile USD/JPY crept back above 159, testing the resolve of the Japanese and US authorities who had bought yen just two weeks earlier.

The theme running through the week is that markets react to the gap between data and expectations, and to what is already priced, rather than to the data in isolation.

The week at a glance

EUR/USD +0.12% to 1.1573, within a tight 74-pip range.
GBP/USD +0.34% to 1.3536.
USD/JPY +0.88% to 159.31, with a high of 159.57.
USD/CAD −0.52% to 1.3872.
AUD/USD +0.27% to 0.7087 after the RBA held.
COMEX gold futures +0.89% to $4,437.30, after touching $4,509.
Brent crude futures rose from about $83.55 to $88.52, according to Yahoo Finance data, as hopes for a quick Iran deal faded.
The S&P 500 rose 0.36% on the week; the Russell 2000 hit a record close on Friday.

Weekly opens and closes come from Yahoo Finance hourly data; your broker’s prices may differ slightly.

Day by day

Monday 10 August: the yen weakens again, oil climbs

USD/JPY rose more than 150 pips on Monday and broke above 159.00 in US trading. investingLive described it as a challenge to Japan’s finance ministry and the US Treasury, whose efforts to cap the pair had so far had limited success. The yen gave back a large part of its intervention gains.

Oil rose almost 5%, with WTI up $3.90 to about $82.08, as markets grew sceptical about peace with Iran and a reopening of the Strait of Hormuz. investingLive reported that Trump appeared to be shifting from military options towards a blockade aimed at Iran’s oil exports. Spot gold rose $46 to about $4,388. Cleveland Fed President Hammack said it was time to bring more restraint into policy, and the 10-year Treasury yield rose 4.3 basis points to 4.70%.

Tuesday 11 August: the RBA holds, Japan closed

The Reserve Bank of Australia kept its cash rate at 4.35%, as markets expected. The vote was unanimous. The Board’s statement said “headline inflation is still too high” and that “the disruption to global oil supply is adding directly to inflation”, with higher fuel costs spreading to other goods and services. It does not expect inflation to return to the middle of its target range “until late 2027”, and said it would raise the cash rate further if upside risks materialise. investingLive’s preview called it a likely “hawkish hold”, and that is what it was.

Japanese markets were closed for a public holiday. Elsewhere the dollar was little changed: EUR/USD around 1.1540, USD/JPY around 159.29 and GBP/USD around 1.3504 late in the US session. Germany’s DAX set a record close. Chicago Fed President Goolsbee said prices and affordability were “the biggest problem facing the economy”.

Wednesday 12 August: CPI exactly in line

US CPI for July rose 0.1% on the month and 3.4% on the year, down from 3.5% in June. Core CPI rose 0.2% on the month and 2.5% on the year, the lowest since February. Every headline figure matched consensus. Energy prices fell 1.5% and gasoline 2.9%, while shelter rose 0.3%.

The odds of a September hike slipped to around 39% from 44% before the release. You might expect that to weaken the dollar, and it did at first. But the dollar reversed and closed higher against every major currency. EUR/USD ended near 1.1522, USD/JPY near 159.46, and NZD/USD fell 0.37%. A 10-year Treasury auction cleared at 4.683%.

This is a classic example of a release that matches consensus producing a messy reaction. With no surprise to trade, the market fell back on positioning and other flows.

Thursday 13 August: UK growth in line, US producer prices soft

UK preliminary Q2 GDP grew 0.4% on the quarter, exactly as expected, down from 0.6% in Q1. Services rose 0.5%, construction 0.3% and production was flat. Compared with a year earlier, the economy was 1.2% larger.

US PPI for July was flat on the month against a 0.2% rise expected, and the annual rate slowed to 4.7% from 5.5%. Core PPI rose 0.2% against 0.3% expected and 4.2% on the year, in line. investingLive noted that the figures pointed to softer PCE inflation later in the month, and the dollar slipped modestly on the release.

Friday 14 August: retail sales slump

US retail sales fell 0.6% in July against a 0.1% gain expected, the first headline decline in nine months. Sales excluding autos fell 0.3% and the control group, which feeds into GDP, fell 0.4%. Vehicle sales dropped 1.8% and non-store retailers 2.2%.

The University of Michigan’s preliminary August sentiment index fell to 51.0 against 54.5 expected. One-year inflation expectations rose to 4.3% and five-year expectations stood at 3.3%, an awkward mix of weaker spending and higher expected inflation.

The dollar fell against every major, most against the New Zealand dollar (0.65%) and Canadian dollar (0.42%). investingLive said September hike odds fell to around 30% from near 62% at the recent peak. Curiously, Treasury yields rose: the 10-year added about 5 basis points to 4.69%, and European yields jumped further, with the German 10-year up 7.1 basis points and the UK 10-year up 9.0 basis points. Oil rose 1.4% to about $82.38.

Pair by pair

USD/JPY: testing the authorities

USD/JPY rose 0.88% to 159.31, its second consecutive weekly gain since the post-intervention low. The interest rate gap remains wide, and every dip has been bought. The question the market is asking is how far the authorities will let it run before acting again. That uncertainty is what makes USD/JPY risky to trade at these levels: a calm drift higher can turn into a sudden fall at any time. Our guide to central banks and interest rates explains why rate differentials keep pulling in one direction while official action pushes in the other.

EUR/USD: a quiet range

EUR/USD rose just 0.12% to 1.1573, trading between 1.1515 and 1.1589. With no ECB meeting until September and no major euro-area data, the pair took its cue from US releases, dipping on CPI day and recovering on Friday.

GBP/USD: no surprise, small gain

Sterling gained 0.34% to 1.3536. UK GDP matched forecasts, so the pair followed the dollar. The UK 10-year gilt yield rose above 5% on Friday, according to investingLive.

USD/CAD: the loonie keeps grinding higher

USD/CAD fell 0.52% to 1.3872, its third weekly decline in a row. Oil rose and US data weakened, both helpful for the Canadian dollar, even with the US threat of 50% tariffs on Canadian imports from 19 August still hanging over the currency.

AUD/USD: a hawkish hold helps

The Aussie rose 0.27% to 0.7087. The RBA kept the door open to further hikes, which supports the currency relative to central banks that are holding or leaning towards cuts.

Gold: consolidation after a surge

COMEX gold futures rose 0.89% to $4,437.30, after touching $4,509. After a 6.5% gain the previous week, a period of sideways trading is common as the market digests the move.

Oil creeps back up

The previous week’s optimism about the Strait of Hormuz faded. Brent crude futures rose from about $83.55 to $88.52 over the week, according to Yahoo Finance data, after investingLive reported that Washington appeared to be leaning towards a blockade of Iranian oil exports rather than further strikes, and Iran signalled it would keep oil flows through the Strait restricted. For central banks this is the uncomfortable part of the story: US CPI showed energy prices falling in July, but the oil price was already moving the other way by the time the data were published. Data describe the past month; markets price the next one. That gap is one reason why central banks such as the RBA keep stressing upside risks even when the latest inflation print looks better.

Inflation data: why “in line” is not neutral

CPI matched consensus on every headline measure and the dollar still moved 0.1–0.4% against the majors. Why?

First, the consensus is a median of economists’ forecasts, but traders also price a distribution around it. If many traders had positioned for a softer number, an in-line print is a disappointment for them. Second, the subcomponents matter. Shelter, services and core goods each tell a different story about how persistent inflation is. Third, other flows, such as month-end hedging or option expiries, can dominate on a day with no surprise.

Our guide to how economic data moves forex explains the difference between headline, core and the various measures the Fed watches.

Producer prices and the pipeline

US PPI fell sharply on an annual basis, from 5.5% to 4.7%. Producer prices measure what businesses receive for their goods and services. They often lead consumer prices because higher costs for businesses eventually reach shoppers. A sharp slowdown in PPI suggests the energy shock’s first-round effect is fading, though it does not say anything about whether second-round effects in wages and services will appear later. That distinction between first-round and second-round effects is central to every major central bank’s current thinking.

When bad data lifts yields

Friday showed something that confuses many new traders: weak US data, a weaker dollar, and higher Treasury yields, all at once. You would normally expect weak data to lower yields as investors price fewer hikes.

The explanation lay partly outside the US. European government bond yields rose more sharply than Treasuries, with the French and Italian 10-year yields up about 9–10 basis points. When global yields rise together, often because investors demand more compensation for holding long-dated government debt, US yields get pulled along. Meanwhile the dollar fell because the gap between US and other rates narrowed. The yield level and the yield gap are different things, and currencies respond more to the gap.

A worked example: event risk and position size

Suppose a trader with a €10,000 account wants to hold a EUR/USD position through the US retail sales release on Friday, with a stop 30 pips away. Using the common rule of risking no more than 1% of the account, the maximum loss is €100. On EUR/USD, a standard lot is worth $10 per pip, so a mini lot (0.1) is worth $1 per pip. Risking about €100 (roughly $116 at 1.157) over 30 pips allows about $3.85 per pip, or about 0.38 lots. This is an illustrative calculation.

But on a data release, the stop may not fill at the stated level. If price jumps 20 pips through it, the loss would be 50 pips, about $193 or 1.7% of the account. That is why some traders halve position size into high-impact releases. Our guides on position sizing and slippage go through this in detail.

What this week teaches

Consensus is a reference point, not a forecast you can bank on. CPI matched it exactly and the dollar still moved.
Weak spending plus higher inflation expectations is a hard mix for any central bank. The University of Michigan survey captured both in one release.
The yield gap matters more than the yield level. US yields rose on Friday, but European yields rose more, and the dollar fell.
Authorities cannot fix a price indefinitely. USD/JPY has steadily recovered towards 160 since the intervention, because the rate gap has not changed.
Risk your account, not your conviction. Event-driven moves can blow through stops. Most retail CFD accounts lose money; read why most retail CFD traders lose and keep a trading journal to see how your own results behave around releases.

Scheduled next week (17–21 August)

Events on the calendar, listed for planning only:

Monday 17 August: Japanese preliminary Q2 GDP; Chinese activity data (July); Canadian CPI (July).
Tuesday 18 August: UK labour market report; German ZEW survey (August).
Wednesday 19 August: UK CPI (July); euro-area final CPI (July); FOMC minutes from the July meeting; US 20-year bond auction; scheduled start date of the 50% US tariff on a range of Canadian imports.
Thursday 20 August: Riksbank decision; China loan prime rates; Australian jobs report (July); Japanese trade balance (July).
Friday 21 August: Japanese CPI (July); UK retail sales (July); flash PMIs for the euro area, UK and US (August); Canadian retail sales.

The Jackson Hole symposium follows the week after. For the start of this story, see our recap of the week the yen hit a 40-year low and last week’s payrolls recap.

Sources

Not investment advice. This is general information and education, written without knowledge of your circumstances. It is not a recommendation to buy or sell any instrument. Past performance is not a reliable indicator of future results. Trading leveraged products carries a high risk of losing money. Risk warning

Forex week in review 33/2026: in-line CPI, a retail sales slump and fading Fed hike bets