After a mixed US employment report, traders will assess CPI inflation readings on Thursday for clues on the Fed’s next interest rate decision in September. The UK will report GDP growth figures on Friday, while in Asia, China’s CPI inflation and trade figures might deliver new hints on Beijing’s stimulative policy on Tuesday and Wednesday, respectively. Hence, this week’s calendar events could make EURUSD, GBPUSD and AUDUSD worthy to watch.

US CPI inflation --> EUR/USD

The US employment growth slowed surprisingly to 187k in July, while June’s downwardly revised gain of 185k, which was the smallest addition since April, added to speculation that the still resilient labor market has started to respond to the aggressive monetary tightening. Despite that, an unexpected rebound in wage growth and a soft pullback in the unemployment rate suggested that the battle with inflation may not end soon and another rate hike is possible in September.

On Thursday, the Bureau of Labor statistics will provide fresh evidence on inflation. July’s headline CPI is expected to bounce up to 3.3% y/y from 3.0% previously, whilst the core measure is forecast to tick down to 4.7% from 4.8% before. If that turns out to be the case, the headline inflation would still be the lowest since March 2021, though a potential resurgence could give food for thought, especially if the core measure, which is a better proxy of the inflation trend, turns higher too.

Euro/dollar managed to set a strong footing near a familiar support zone on Friday and it would be interesting to see whether US CPI inflation could help the pair crawl higher this week.

UK GDP growth --> GBP/USD

The UK economy has been almost stagnant since the start of the year and Friday’s preliminary Q2 GDP data may not be better, showing poor growth at a steady 0.2% y/y and zero expansion on a quarterly basis.

The Bank of England said that the economy will keep performing at the same pace in the near term, though the focus will remain on price stability as the risks around inflation remain skewed to the upside. Therefore, unless GDP data miss expectations by a wide margin, investors will not downscale their forecasts for another 25bps rate hike in September. Nevertheless, disappointing readings could still put some pressure on pound/dollar on speculation future monetary tightening could be less extensive. The pair is facing pressure around the 1.2740-1.2770 resistance for the third consecutive trading day, while higher, there are some key obstacles that might be worth keeping a close eye on.

China inflation & trade data --> AUD/USD

Beijing's recent stimulus measures aimed at boosting consumption lacked major changes, revealing limited options for the government to bolster economic growth.

On Tuesday, trade figures are expected to show a continued decline in exports and imports. Exports are forecast to fall for the third consecutive month but at a softer pace of -9.8% from -12.4% previously. Imports could stay negative for the ninth consecutive month, likely contracting by -5.6%. Then on Wednesday, headline CPI inflation is expected to fall below zero to -0.5% y/y for the first time since February 2021, witnessing persisting caution among consumers too.

The figures could disappoint investors, especially regarding those who rely on Chinese demand such as businesses in Australia. A worse-than-expected outcome could press AUD/USD back to its previous low of 0.6513 or even lower to June’s support region of 0.6485.