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Week Ahead: Focus on Fed, RBA, and RBNZ through the Dog Days of Summer

We’re finally past the peak of (peak growth?) earnings season, with a record-breaking 87% of companies in the S&P 500 beating analysts’ estimates…

From a macroeconomic perspective, the highlight of last week’s trade came exactly in the middle of the week. Wednesday’s US Consumer Price Index (CPI) report for the month of July came in at 5.4%, with the ex-food-and-energy reading printing at 4.3%. While these numbers were generally in-line with economists’ expectations, this marked the first inflation report that did not come in hotter-than-anticipated in the last five months, raising hopes that the global economy may be at “peak inflation.”

Of course, the US Producer Price Index (PPI) came in above expectations the very next day, so perhaps price pressures won’t ultimately prove as transitory as some hope, but combined with a strong jobs report the previous week, the world’s largest economy seems to be getting back on (the Federal Reserve’s preferred) track.

Updates from the Fed

The middle of the week will bring two major updates from the Federal Reserve. First, on Tuesday, Fed Chairman Jerome Powell will speak at an online town hall event. This will mark his first public comments since last week’s inflation data and likely the last public comments before next week’s highly-anticipated Jackson Hole Symposium. Traders will be keen for an update on how he’s viewing the recent CPI and PPI data, as well as any hints about the timeline for a potential timeline. With most analysts expecting no firm announcement until September, there is some risk that the Powell is intentionally vague and punts the decision to later in the month.

On Wednesday, the Fed will release the minutes from last month’s monetary policy meeting. With Powell repeatedly deferring to the broader committee and emphasizing the collaborative nature of monetary policy decisions in his press conference, it seems that there may be some dissension in the ranks among other FOMC voters. The minutes should provide more insight on how many central bankers are in favor of tightening policy quickly and how many need to see more strong economic data before feeling comfortable starting the normalization process.

Antipodean Data

Meanwhile, market-moving data out of Europe will be thin on the ground this week as we work our ways through the proverbial dog days of summer. Instead, traders will focus on top-tier data out of Australia and New Zealand, where summer is still months away. The Reserve Bank of Australia will release the minutes from its most recent monetary policy meeting on Tuesday; recall that the central bank defied some traders’ expectations by sticking to its plan to reduce bond purchases (taper) down to $4B/week despite ongoing lockdowns. These minutes will provide more insight on the decision process and what it would take to make the RBA deviate from its normalization plan.

The next day, traders will see whether the Reserve Bank of New Zealand (RBNZ) follows a similar path toward normalization or uses the global resurgence of the delta variant as an excuse to leave policy more accommodative. Finally, Thursday’s AU employment report will provide a more current perspective on the Australian labor market. Eight of the last nine jobs reports have shown growth, but the month-to-month figures have fluctuated dramatically, so volatility in Australian assets is likely regardless of how the figure prints.


We’re finally past the peak of (peak growth?) earnings season, with a record-breaking 87% of companies in the S&P 500 beating analysts’ estimates. That said, there are still some relevant releases to watch this week, highlighted by BHP, Walmart, Home Depot, Lowes, Target, Cisco, Nvidia, Roblox, Tencent, Antofogasta, Macys, John Deere, and Foot Locker.

Economic Data

This week’s important economic data releases include the following:


  • Australia: Monetary Policy Meeting Minutes


  • US: Retail Sales
  • US: Industrial Production and Capacity Utilization
  • US: Fed Chairman Powell Speech


  • New Zealand: RBNZ Meeting
  • UK: CPI
  • Canada: CPI
  • Crude Oil Inventories
  • US: FOMC Meeting Minutes


  • Australia: Employment Report
  • US: Philly Fed Index
  • US: Initial Unemployment Claims


  • UK: Retail Sales
  • Canada: Retail Sales

Chart of the Week: Dollar Index (DXY)

As the world’s reserve currency, the US dollar is the fulcrum around which other markets rotate, so it’s worth checking in on regularly. Looking at the chart below, the greenback rallied into its 93.20-40 resistance zone last week before rolling over and selling off into the weekend. After a prolonged “bearish divergence” in the RSI indicator, signaling waning buying pressure, last week’s pullback isn’t particularly surprising.

Heading into this coming week, traders will be watching the confluence of the 50- and 200-day EMAs near 92.10 as a possible support level. Especially if we see some hawkish commentary from Powell or the FOMC minutes, this support confluence could put a floor under the dollar index this week. Meanwhile, a confirmed breakout above 93.40 would be a strong bullish signal and open the door for a continuation toward the lower-94.00s next.

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