Week Ahead – Fed Policy Expectations in Focus as Key U.S. Data Looms

Weekly Market Outlook (August 11st – August 15th)

Markets remained relatively subdued last week due to a light economic calendar. The most notable development was President Trump’s announcement of a 100% tariff on imported semiconductors. However, the impact on equity markets was limited, with the Nasdaq 100 and other major indices showing resilience.

In the currency space, the U.S. Dollar extended its losses following the disappointing non-farm payroll data. Still, overall volatility remained contained, and the Dollar ended the week lower. Meanwhile, gold posted another weekly gain, supported by risk-off sentiment and safe-haven demand.

Week Ahead – Fed Policy Expectations in Focus as Key U.S. Data Looms

This week, all eyes will be on a slate of U.S. economic data, with particular attention on inflation figures—namely the Consumer Price Index (CPI) and the Producer Price Index (PPI). These readings will be pivotal in shaping market expectations for the Federal Reserve’s policy stance at its upcoming September meeting.

Markets are currently pricing in a high probability—93.4% according to the CME FedWatch Tool—of a rate cut in September, and some are even beginning to anticipate a potential 75 basis points of cuts by the end of 2025.

This evolving outlook has significant implications for the U.S. Dollar, U.S. equity markets, and broader global financial sentiment.

Key Events & Economic Data, Why It Matters?

Beyond the U.S. economic releases, several major high-impact events across other key regions will also shape market sentiment this week. The Reserve Bank of Australia (RBA) will announce its interest rate decision on Tuesday; a move closely watched for any shift in tone amid mixed domestic data.

In the Eurozone, a string of key economic indicators, may also provide further clarity on the region’s economic trajectory and influence expectations for future European Central Bank policy moves.

1. Reserve Bank of Australia Rate Decision – 12 August

The RBA is widely expected to deliver another rate cut at its August meeting, in line with its recent dovish stance. Markets will closely watch whether the move is accompanied by a hawkish tone—or a more cautious, dovish outlook.

A “hawkish cut” or a surprise hold could lift the Australian Dollar (AUD), especially after weeks of consolidation. In contrast, a more dovish tone could weigh further on the AUD and increase bets on additional easing.

2. U.S. Consumer Price Index & Producer Price Index – 12 August & 14 August

Recent U.S. data—such as the ISM Services PMI “Prices Paid” component—indicated lingering inflationary pressures. However, the weaker-than-expected non-farm payroll report has shifted market expectations decisively toward a Fed rate cut in September.

If CPI and PPI data confirm a continued disinflationary trend, it would reinforce market bets for near-term easing and likely exert downward pressure on the U.S. Dollar.

3. Eurozone & UK Gross Domestic Product – 14 August

Both the Eurozone and UK economies are grappling with weak growth momentum, further complicated by external headwinds like U.S. trade policy.

The upcoming Q2 GDP readings will offer a clearer picture of their economic health. Any downside surprise could weigh on the Euro (EUR) and British Pound (GBP), as well as their respective stock markets.

Key Takeaway for the Week

After a relatively quiet and range-bound week, markets are poised for a pickup in volatility as several high-impact events take center stage—most notably, the release of U.S. Consumer Price Index (CPI) data, which is expected to be a key driver of sentiment across asset classes.

The U.S. Dollar faces a pivotal moment: will it regain bullish momentum at current levels, or come under renewed selling pressure as disinflationary trends strengthen? Meanwhile, gold continues to hover near the $3,400 mark, and global equity indices remain resilient despite mounting macro uncertainty.

With a series of major economic releases and central bank decisions ahead, this week could mark a critical turning point for currencies, commodities, and global risk sentiment.