Markets await July US inflation figures, with Fed officials emphasizing inflation risks despite mixed economic signals.
The US Dollar Index holds near 99.83, with EUR/USD at 1.1540, as traders adopt a cautious stance ahead of July’s CPI report. Fed funds futures reflect a 48% probability of a September rate hike, balancing recent soft payrolls data against persistent inflation concerns.
Consensus forecasts headline CPI to rise 0.1% month-over-month, slowing the annual rate to 3.4% from 3.5% in June. Core CPI is expected to increase 0.2% mom, with the yearly rate easing to 2.5% from 2.6%. The data will be pivotal for the Fed’s September decision, following mixed signals on growth and employment.
Chicago Fed President Austan Goolsbee and Atlanta Fed’s Cheryl Venable have reinforced a hawkish tone, linking inflation risks to labor market stability and geopolitical tensions. Venable noted that Middle East conflict resolution could ease energy prices, while prolonged instability may sustain inflationary pressures.