Weekly Market Preview: What’s Moving the Markets This Week (17–21 August)

Last week brought five high-impact data releases across AUD and USD in four trading days. The data across all five releases pointed in a consistent direction: softer growth, softer consumer spending, and softer inflation. September rate hike expectations, which stood at 72.3% three weeks ago, have fallen significantly following last week’s data.

This week the calendar is lighter. One high-impact release dominates: the FOMC Minutes from the July 29 meeting, published on Wednesday at 6:00 PM GMT. Everything this week sets the table for Jackson Hole, which begins on Thursday 28 August.

Here is what happened last week and what traders need to watch this week.

What Happened Last Week

CPI July: in line, but inflation is still wiping out wages

The Consumer Price Index for All Urban Consumers rose 0.1% in July on a seasonally adjusted basis and 3.4% year-on-year, not seasonally adjusted. Core CPI, excluding food and energy, rose 0.2% in July and 2.5% year-on-year. Both readings matched the Dow Jones consensus exactly. Shelter costs rose 0.1% and accounted for roughly two-thirds of the headline monthly increase. The energy index declined in July, continuing the trend of falling fuel prices.

The in-line result kept the “no need to hike” narrative intact following the previous week’s weak NFP print. However, inflation remains above the rate of wage growth, which as of July was running at 3.2% year-on-year, meaning average hourly earnings slipped 0.2% in real terms from a year earlier. Navy Federal Credit Union’s chief economist Heather Long noted that for middle and lower-income Americans, this gap is the key issue heading into the second half of 2026.

PPI July: flat and below forecast. Good news for the inflation pipeline

The Producer Price Index for final demand was unchanged in July on a seasonally adjusted basis. On an unadjusted basis, wholesale prices rose 4.7% over the 12 months ended in July. Goods prices fell 0.7% for the month, driven by a 3.1% decline in energy costs including a 5.7% slide in gasoline prices. Core PPI excluding food and energy rose 0.2% in July, below the 0.3% consensus estimate. Two consecutive months of flat or declining PPI final demand suggests upstream price pressures are easing, which historically precedes lower consumer prices in subsequent months.

Retail Sales July: biggest monthly drop in over a year

US retail sales fell 0.6% month-on-month in July, sharply missing expectations for a 0.1% rise and reversing June’s 0.2% gain. It was the first decline since October 2025 and the biggest since May last year. Motor vehicle and parts dealers posted the sharpest monthly decline among major categories, falling 1.8%. Nonstore retailers dropped 2.2% from June. Gasoline stations fell 0.9%. Sales excluding food services, auto dealers, building materials stores and gasoline stations, which feed directly into GDP calculations, were down 0.4%, the most since the start of 2025. Year-on-year, retail sales were still up 5.0%, and the three-month average through July ran 6.3% above the same period a year ago. The trend is slowing but has not broken down.

RBA: holds at 4.35% with a hawkish tone

The Reserve Bank of Australia held the cash rate at 4.35% at its August meeting, marking the second consecutive hold of the year following the first half of 2026 being front-loaded with three rate hikes. Governor Michele Bullock said inflation remains too high and that the board remains concerned about the inflation outlook. Vanguard’s senior economist Grant Feng noted that the combination of a lower starting point for inflation, a loosening labour market, slowing growth, and falling house prices should allow the RBA to refrain from further rate increases for the remainder of the year. AUD saw modest weakness following the decision as markets priced out the residual probability of a hike.

University of Michigan August preliminary: sentiment falls sharply

The University of Michigan’s preliminary August 2026 Consumer Sentiment Index came in at 51.0, falling short of the 54.5 consensus estimate and sliding from July’s final reading of 55.2. Expected business conditions sank 11% for the short run and 17% for the long run. Only 8% of consumers expect their income growth to outpace inflation over the next year. One-year inflation expectations rose to 4.3% from 4.2% in July, with five-to-ten year expectations holding at 3.3%. The deterioration was broad-based across political and demographic groups, with older consumers, lower-income consumers, and those without a college degree showing the largest declines. The final August reading is scheduled for release on 28 August, the same day as the Jackson Hole keynote.

This Week’s Events

Wednesday, 19 August — FOMC Meeting Minutes (USD) | 6:00 PM GMT

The Federal Reserve publishes the detailed record of the July 29 FOMC meeting on Wednesday at 2:00 PM ET, the final major monetary policy signal traders will have before Fed Chair Kevin Warsh speaks at Jackson Hole on 28 August.

The July meeting produced a 9-3 vote to hold at 3.50–3.75%, the most divided FOMC split since September 2016. Three regional presidents, Cleveland’s Beth Hammack, Minneapolis’s Neel Kashkari, and Dallas’s Lorie Logan, voted for an immediate hike. Warsh’s post-meeting statement was deliberately brief and provided no forward guidance on the path of rates. The Minutes will fill in the detail that the statement left out.

Traders will be reading for three specific signals. First, how the committee characterised the labour market following the weak June NFP data they had at the time of the meeting. The July NFP print of -23,000 came after the meeting, so the minutes will not reflect it, but the committee’s labour market framing will reveal how much weight they were already placing on signs of softness. Second, how seriously the three dissenters made their case for a September hike, and whether any other members were close to joining them. Third, any language around the conditions that would need to be met for a hike in September. Given that the subsequent data has moved in a notably softer direction, that framing will tell traders whether September is still a realistic option or whether the committee needs to see something materially different.

The week’s remaining data is second-tier. Monday brings the New York Empire State Manufacturing Index for August at 12:30 PM GMT, followed by the NAHB Housing Market Index at 2:00 PM GMT. Tuesday brings Housing Starts and Building Permits at 12:30 PM GMT alongside Industrial Production at 1:15 PM GMT. None of these usually generate the kind of sustained USD moves seen around rate decisions or inflation data, but any significant miss in the housing or industrial figures would add to the slowing economy narrative building since last Friday’s retail sales print.

What traders are watching:

Language pointing toward September hike — Bullish USD. If the minutes show strong internal support for action in September, or language suggesting the committee was on the verge of moving, the Dollar strengthens as hike expectations rebuild.

Language suggesting caution or data-dependence — Bearish USD. If the minutes emphasise concerns about growth risks or show the committee was comfortable waiting, September hike expectations fall further and the Dollar weakens.

The Bigger Picture Heading Into Jackson Hole

Five data points last week pointed in the same direction. CPI and PPI are cooling. Retail sales are slipping. Consumer confidence is falling. The RBA’s hold adds to a pattern of central banks pausing to assess whether existing rate levels are sufficient.

For the Fed specifically, the data trajectory since the July 29 meeting has moved consistently against the case for a September hike. CPI came in at 3.4%, down from 3.5%. PPI was flat. Retail sales dropped 0.6%. The July NFP was -23,000. UMich sentiment fell to 51.0. Every print since the meeting has pointed in the same direction.

Morgan Stanley Wealth Management’s chief economic strategist Ellen Zentner noted after the CPI release that “in-line inflation will keep the ‘no need to hike rates’ narrative that took hold after last week’s jobs report intact.”

The minutes on Wednesday will show whether the July 29 committee was already moving toward that view before any of those subsequent prints arrived. Jackson Hole on 28 August is where markets will be looking for Warsh to address the gap between the committee’s internal debate and the data that has landed since the July meeting.

Calendar Snapshot

Date	Event	Currency	Time (GMT)
Mon 17 Aug	NY Empire State Manufacturing Index	USD	12:30 PM
Mon 17 Aug	NAHB Housing Market Index	USD	2:00 PM
Tue 18 Aug	Housing Starts and Building Permits	USD	12:30 PM
Tue 18 Aug	Industrial Production	USD	1:15 PM
Wed 19 Aug	FOMC Meeting Minutes (July 29 meeting)	USD	6:00 PM

A Quick Note on Risk

Economic data releases can cause sharp, fast moves in the market. Price can spike in both directions before settling. This week the primary risk window is Wednesday at 6:00 PM GMT when the FOMC Minutes publish. Make sure you understand how your FXIFY account drawdown rules work before you trade around major news events. For more on how funded traders approach volatile sessions, see our guides on trading styles for funded traders and how news events affect prop traders.