Where to begin
On Wednesday, August 10, at 20:30, the US Labor Department will release the July US CPI data. The market expects the annual CPI rate to come in at 3.4%, which is 0.1 percentage points lower than the previous figure. The monthly CPI rate is projected at 0.1%, up from the prior -0.4%. Based on these expectations, consumer prices in the US may have shown a medium-term downward trend in July, though short-term price levels could still be recovering.
In the chart below, the purple line represents the US monthly CPI rate. Compared to the annual rate, the monthly data is more stable and shows a fluctuating pattern. The grey line is the annual CPI rate, which closely tracks the blue core CPI annual rate. For the Federal Reserve, the core CPI annual rate, which excludes volatile food and energy prices, is more instructive. Although the annual CPI and core CPI rates move together, the core CPI rate has a greater impact in absolute terms. The market expects core CPI to be 2.5%, down 0.1 percentage points from the previous reading. The Fed's target inflation for monetary policy is 2%, so the expected 2.5% is 0.5 percentage points above the target. This provides a theoretical basis for the Fed to raise interest rates to curb inflation. If the actual reading on Wednesday exceeds expectations, the probability of a Fed rate hike will increase, which would be bullish for the US dollar index.
Tuesday's Key Event: RBA August Rate Decision
On Tuesday at 12:30, the Reserve Bank of Australia (RBA) will announce its August interest rate decision. The consensus is that it will keep the benchmark rate unchanged at 4.35%, with a low probability of a fourth rate hike this year, as Australian inflation has shown signs of peaking and declining. At 13:30, RBA Governor Michele Bullock will hold a monetary policy press conference. The focus will be on her views on the rate path and inflation outlook. If she signals a hawkish stance on tightening policy, the Australian dollar could be supported.
The chart below overlays Australia's interest rate and CPI annual rate curves. Australia's CPI annual rate is released quarterly. While monthly data is also published, it receives less market attention. As shown, the blue line representing Australia's quarterly CPI annual rate is a reliable leading indicator for the RBA's rate decisions. For example, when Australian CPI data began to decline in the first half of 2020, the RBA subsequently started a rate-cutting cycle. When inflation peaked in the fourth quarter of 2022, the RBA halted rate hikes in November 2023. Since the second quarter of 2025, Australia's inflation rate has stopped falling and rebounded, prompting the RBA to start a new rate hike cycle, with three cumulative hikes totaling 75 basis points so far. In this year's second quarter, Australia's CPI annual rate fell from 4.1% to 3.9%, indicating that the rate hikes are effectively curbing inflation. The RBA is likely to keep rates on hold at its upcoming meeting to observe further inflation developments.
Wednesday's Focus: OPEC/EIA/IEA Monthly Oil Market Reports
On Wednesday at 00:00, the EIA will release its monthly Short-Term Energy Outlook report. At 16:00, the IEA will publish its monthly oil market report. At an unspecified time, OPEC will release its monthly oil market report. Based on past experience, OPEC's report is typically released between 18:00 and 21:00. All three agencies possess some exclusive data that other institutions lack, and their reports have different biases. These three reports complement each other, aiding in the analysis of the current international energy market's supply and demand dynamics. The most critical aspect of interpreting these reports is understanding the supply and demand expectation data. In the July reports, the EIA expected oil demand to decrease by 1 million barrels per day (bpd) in 2026, the IEA forecast a reduction of 1.2 million bpd, and OPEC projected an increase of 0.78 million bpd. This shows that OPEC, being responsible for global oil production and sales, naturally tends to be bullish on demand. On the supply side, in the previous report, the IEA predicted a supply increase of 4.1 million bpd month-on-month to 98.8 million bpd. The EIA expected a rise of 3.98 million bpd to 97.46 million bpd. OPEC estimated an increase of about 3 million bpd to 36.28 million bpd. It is clear that OPEC's expectations for supply growth are the weakest, which aligns with its identity and position as an oil-producing nation.
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