Trading the Inflation Sandwich: What to Watch?

11 ส.ค.

Trading the Inflation Sandwich: What to Watch?


US CPI inflation (Consumer Price Index).

The CPI report is expected to confirm a continuation of the disinflationary trend observed in recent months. Analysts predict the annual inflation rate to edge down to 2.9%, while the core inflation rate is likely to decelerate to 3.2%.

This ongoing cooling of inflation could bolster expectations for the Federal Open Market Committee (FOMC) to lower interest rates in September.

Should inflation continue its downward trajectory, the FOMC may shift its focus to job numbers with greater intensity.



Reserve Bank of New Zealand (RBNZ) rate decision

Of the 31 economists surveyed by Reuters, 9 expect the central bank to maintain its Official Cash Rate (OCR) at 5.5% for the ninth consecutive meeting, while 12 forecast a 25-basis point rate cut.

A decision to hold could lend support to the New Zealand dollar (NZD), whereas a rate cut might exert downward pressure.

Traders might like to keep an eye on the AUD/NZD cross, with key resistance and support levels possibly at $1.0975 and $1.0843



UK CPI inflation

Following the Bank of England’s (BoE) recent decision to cut the Bank Rate by 25 basis points to 5.0%—the first reduction in four years—a fresh inflation report is due from the UK.

Headline CPI inflation for July is expected to rise to 2.3% year-on-year from June's 2.0%, with estimates ranging from 2.0% to 2.4%.

Core inflation, which excludes volatile items like food and energy, is projected to hold steady at 3.5%, with a slight margin of variation between 3.3% and 3.5%.