A dreadful week saw the US dollar (USD) plunge to new yearly lows in the sub-101.00 region as investors continued to price in the likelihood of further and perhaps deeper rate cuts from the Federal Reserve in the latter part of the year. The latter was reinforced by Fed officials and Chief Powell’s dove-like message at the Jackson Hole event on Friday.

The US Dollar Index (DXY) fell to a 13-month low in the 100.70-100.65 band towards the end of the week, reflecting growing bets on rate cuts in the latter part of the year. Durable goods orders start the week on August 26, supported by the FHFA’s House Price Index and the Conference Board’s Consumer Confidence gauge, both on August 27. The weekly mortgage applications tracked by MBA and the EIA’s report on US crude oil inventories are due on August 28. The weekly Initial Jobless Claims, another revision to the Q2 GDP Growth Rate, advanced goods trade balance and Pending Home Sales are all due on August 29. The week will close with PCE, Personal Income, Personal Spending and the latest Michigan Consumer Sentiment print.

EUR/USD rose for a fourth straight week, testing levels last seen in the summer of 2023, just below 1.1200. Germany’s IFO Business Climate is due on August 26, followed by Germany’s final Q2 GDP Growth Rate due on August 27. Still in Germany, GfK Consumer Confidence is due on August 28. The EMU Consumer Confidence final report is due on August 29, along with Germany’s final inflation figure. Germany’s Retail Sales and Labor Market report are due on August 30, followed by the euro bloc’s flash inflation rate and unemployment figure.

The continuation of the strong rally sent GBP/USD past the 1.3200 barrier for the first time since July 2022 amid further selling in the greenback. Mortgage approvals and mortgage lending are due on August 30.

USD/JPY resumed its downward trend to close the week with significant losses around 144.60, reversing two consecutive weeks of gains following the sharp sell-off in the US dollar. The final Coincident Index and Leading Economic Index are due on August 28, ahead of the weekly Foreign Bond Investment data on August 29. The unemployment rate, retail sales, flash Industrial Production, consumer confidence and housing starts are all due on August 30.

AUD/USD flirted with bi-monthly highs just below the 0.6800 threshold, extending its recovery for the third straight week. The RBA is due to release its monthly CPI indicator on August 28, while Housing Credit and Retail Sales are due on August 30.

Anticipating economic prospects: voices on the horizon

• The ECB’s Nagel will speak on August 27.
• The Fed’s Waller will speak on August 28, along with the BoE’s Mann.
• The Fed’s Bostic, the SNB’s Jordan and the ECB’s Nagel will speak on August 29.

Central banks: upcoming meetings to shape monetary policy

• The Hungarian Central Bank (MNB) will meet on August 27.