The week begins quietly on Monday, with no major scheduled economic events for the foreign exchange market. Currency markets enter the week attuned to the diverging monetary policy paths of major central banks, with rate decisions and growth data from Australia, the United States, and the United Kingdom shaping positioning across key pairs.

Tuesday brings the Reserve Bank of Australia's monetary policy announcement. The United States will also release ADP weekly employment change data and existing home sales figures.

Wednesday features the U.S. inflation prints. On Thursday, the United Kingdom will publish its GDP month-over-month and preliminary GDP quarter-over-quarter figures. The U.S. will simultaneously release core PPI m/m, PPI m/m, and unemployment claims. Friday closes the week with U.S. retail sales m/m, preliminary University of Michigan consumer sentiment, and preliminary University of Michigan inflation expectations.

Reserve Bank of Australia

At this week's meeting, the RBA is widely expected to hold its cash rate steady at 4.35%. Recent Australian inflation data came in below expectations on both headline and trimmed mean measures, reinforcing the case for keeping rates unchanged and allowing additional time for the effects of previous tightening to permeate the economy.

Despite the larger-than-expected inflation slowdown, underlying price pressures remain elevated. The RBA is anticipated to maintain a hawkish posture as it evaluates domestic demand and the potential pass-through of higher energy costs. This positioning stands in contrast to the Federal Reserve and the European Central Bank, both of which have moved toward easing or signaled potential rate cuts, making the RBA's relative hawkishness a notable factor for Australian dollar valuations. Some analysts anticipate a 25 basis point rate hike at the September meeting. Before then, the Bank will have further data to gauge the strength of economic activity and whether rising energy prices are feeding into broader consumer prices.

U.S. Housing Market

The consensus forecast for existing home sales stands at 4.05 million, down from the prior 4.09 million. Wells Fargo analysts, however, project a 2.2% decline in July as the housing market continues to grapple with affordability constraints.

Average mortgage rates reached 6.5% in June and have climbed further since, while home prices remain elevated—particularly in the Northeast and Midwest. Pending home sales also fell in June, and mortgage purchase applications weakened sharply in July, underscoring the persistent challenges confronting buyers. Housing is among the most interest-rate-sensitive sectors of the U.S. economy, and its continued softness reflects the lagged effects of the Federal Reserve's tightening cycle on rate-dependent activity. According to Wells Fargo, longer-term interest rates, including mortgage rates, are expected to remain elevated in the near term, constraining the prospects for a meaningful recovery in housing demand.

U.S. Inflation

Consensus expectations for core CPI m/m sit at 0.2%, compared with the prior reading of 0.0%. Headline CPI m/m is projected at 0.1% versus -0.4% previously. Core CPI y/y is forecast to ease from 2.6% to 2.5%, while headline CPI y/y is expected to soften from 3.5% to 3.4%.

Overall, U.S. inflation is anticipated to moderate, aided by slightly lower gasoline prices. Food inflation has remained contained despite upward pressure from energy costs. Price pressures appear concentrated in a limited number of categories rather than broadening across the economy, though inflation is still expected to make only gradual progress toward the Federal Reserve's 2% target. With the federal funds rate held at 5.25%–5.50%, market participants are closely tracking whether the disinflation trend is sufficient to justify a rate cut at the September FOMC meeting. Traders will scrutinize the data, but with another CPI report scheduled before that meeting, the immediate market reaction may be muted.

United Kingdom GDP

For the U.K., the consensus for GDP m/m is -0.1%, down from the prior 0.1%. Preliminary GDP q/q is expected at 0.4% versus 0.6% previously. The robust Q2 growth figures appear to have been driven largely by momentum carried over from late Q1. Economic activity has since cooled, with monthly GDP showing weaker growth in April and May—a trend expected to extend into June.

ING analysts note that survey-based indicators have painted a weaker picture than headline GDP figures suggest, while seasonal adjustment may have inflated some of the reported strength earlier in the year. The growth data feeds into the Bank of England's ongoing assessment of how quickly to adjust monetary policy, as it balances still-elevated services inflation against signs of economic deceleration.

U.S. Retail Sales

The consensus for core retail sales m/m is 0.2%, rebounding from the prior -0.2%. Headline retail sales m/m is expected at 0.1% versus 0.2% previously. Retail sales will be closely watched as markets assess the health of consumer spending, which accounts for roughly two-thirds of U.S. economic output. Auto sales were broadly flat, while lower gasoline prices are expected to drag down receipts at service stations. Other retail categories are likely to record modest gains, with spending potentially receiving an early-month boost from the U.S. 250th anniversary celebrations and FIFA World Cup-related activity, particularly at grocery stores and restaurants.