Wonderful introduction:
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Official Website]: Trump bombarded Powell again, inflation data boosted the Federal Reserve's bet on interest rate cuts." Hope it will be helpful to you! The original content is as follows:
On Wednesday, intraday, spot gold trading around $3,350/ounce, gold prices rose slightly on Tuesday. After U.S. inflation data maintained Fed rate cut expectations, people's attention turned to other key economic data to be released this week; U.S. crude oil trading around $63.12/barrel, oil prices fell on Tuesday, traders awaited the U.S. Energy ehadb.cnrmation Administration's inventory report and began to pay attention to signs of possible decline in demand at the end of the summer driving season in early September.
The U.S. Department of Labor Bureau of Labor Statistics said Tuesday that the consumer price index rose by 0.2% last month after rising 0.3% in June.
CPI rose 2.7% in the 12 months to July, ehadb.cnpared with a 2.7% increase in June. Economists surveyed by Reuters expect CPI to rise 0.2% year-on-year in June and 2.8% month-on-month.
Corpay chief market strategist Karl Schamotta said, "Basic inflation remains sluggish, giving policymakers room to cope with initial signs of weakness in the labor market. The possibility of a September rate cut should be on the agenda when Chairman Powell spoke at Jackson Hall on the 21st."
The money market had been on the stand-by-side state as the market increasingly expected a moderate reading of U.S. price pressure could consolidate bets on the Fed's next month's rate cut, which increased after last week's weak employment data were released.
Analyst Fawad Razaqzada said in a note: "If the Fed cuts interest rates continuously, the policy interest rate gap with its peers may shrink rapidly, thus confronting the U.S.The dollar against high-yield currencies pose pressure. "
The RBA lowered the cash rate by 25 basis points to 3.60% as generally expected, and the decision was passed by a unanimous vote. The new forecast shows that there is still room for a rate cut this year, with two cuts in 2026 and room for a rate hike in 2027.
The updated economic forecast shows that inflation forecast remains unchanged, with the CPI at the end of 2025, 3.1% in 2026 and 2.5% in 2027. The average inflation rate in 2025 and 2026 also stabilized at 2.6%, and fell to 2.5% in 2027.
However, the growth outlook is significantly lowered. The average annual GDP growth rate in 2025 was lowered from 1.9% to 1. 6%, downgraded from 2.2% to 2.1% in 2026, and is expected to be 2.0% in 2027.
These forecasts are based on the interest rate assumptions of 3.4% in 2025, 2.9% in 2026 and 3.1% in 2027 - meaning there is still room for a rate cut this year after the 2027 rate hike, with two room for a rate cut in 2026.
The RBA noted in a statement that uncertainty in the global economy remains high. While recent developments have made the scope of U.S. tariffs and policy responses in other countries “clearer”, the Bank expects “may avoid more extreme results.”
Even so, uncertainty in trade policy is expected to put pressure on global economic activity and inflation , households and businesses may delay spending until the situation becomes clearer. The RBA said these effects could continue to drag down the Australian economy “for some time”.
UK labour market data for July showed that employment deteriorated slightly and wage growth slowed slightly. Employment fell -8 people month-on-month, or a monthly rate decline of -0.0%, and -0.5% year-on-year ehadb.cnpared with the same period last year. Since peaking in 2024, the number of salaried employees has been on a downward trend, highlighting the gradual cooling of hiring momentum. Median monthly salary growth slowed slightly from 5.7% year-on-year to 5.8%, while applicants fell -6.2k, significantly better than expected 20.8k growth.
In the three months ended June, the unemployment rate was stable at 4.7%, in line with expectations. Wage growth indicators were mixed. Average income, including bonuses, slowed to 4.6% year-on-year from 5.0%, lower than the expected 4.7%. Income excluding bonuses remained flat year-on-year at 5.0%, in line with expectations.
Investor sentiment in Germany weakened significantly in August, and the ZEW economic prosperity index fell from 52.7 to 34.7, well below the expected 40.0. The status quo index further deteriorated from -59.5 to -68.6, and also below the expected -63.0.
Overall, the ZEW economic prosperity index fell from 36.1 to 25.1, lower than the expected 28.4. The status quo index fell -7 points to -31.2./p>
ZEW President Achim Wambach said the decline was partly due to disappointment with the recently announced EU-U.S. trade deal and Germany's poor performance in the second quarter. He noted that the chemical, pharmaceutical, mechanical engineering, metals and automotive industries are facing special pressures to worsen the forward-looking outlook.
CPI data for July showed that the overall inflation rate remained unchanged at 2.7% year-on-year, lower than the expectation of rising to 2.8% year-on-year. Core CPI accelerated from 2.9% year-on-year to 3.1%, higher than the year-on-year expectation of 3.0%. The annual energy index fell -1.6% year-on-year, offsetting the impact of a 2.9% year-on-year increase in food prices.
Moon-month, CPI rose 0.2% and core CPI rose 0.3%, both in line with market expectations. Housing prices rose 0.2%, the biggest contributor to the monthly gains, while the food index remained flat, with energy prices falling -1.1%.
The rebound in core pressure may keep the Fed cautious. Although the market is still expected to cut interest rates in September, the rise in core CPI may limit the pace of policy easing after the meeting.
Richmond Fed Chairman Thomas Balkin said in a speech today that recent policy developments — including a major tax bill, immigration changes and the ehadb.cnpletion of key tariffs and trade negotiations — have lifted most of the “fog” surrounding the economic outlook. What will happen next will depend on how households deal with the price increase that tariffs may bring.
Balkin pointed out that there is evidence that consumers are buying goods in advance while cutting services, a model that, if continued, could limit tariff-driven inflation. “If we see this demand disruption more broadly, the impact of tariffs on inflation will be smaller than many people expect,” Barkin said.
However, he said, if this spending change happens more widely, “businesses will see sales drops and profit margins squeezed. They will look for cost cuts. Employment may be hit by that.”
"We are likely to see inflationary pressures, and we may also see unemployment pressures, but the balance between the two is still unclear," he said. "As visibility continues to improve, we are fully capable of adjusting our policy position as needed."
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