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Sticky PCE Inflation and Resilient GDP Underpin US Dollar – August 27, 2026, 8:00 am

• The US economy showed steady growth as second-quarter GDP met expectations, supported by resilient July personal spending and higher personal income. Steady consumer demand proves households remain healthy despite tighter financial conditions.

• Second-quarter core PCE and July inflation data came in above forecasts, challenging the Federal Reserve path toward its 2 percent inflation target. Sticky price pressures keep policymakers patient and reduce the likelihood of aggressive interest rate cuts.

• Solid economic activity paired with stubborn inflation reinforces a higher-for-longer policy outlook, giving direct support to the US dollar while keeping rate-sensitive assets restricted.

US Dollar Weakens on Soft Housing Data as AUD and EUR Firm – August 26, 2026, 8:00 am

• The US dollar softened on cooling housing data, as June prices flattened and July new home sales fell 10.5 percent to 0.607 million, lifting inventory to 9.6 months. Meanwhile, the euro gained support after Germany’s August Ifo survey beat forecasts across Business Climate, Current Assessment, and Expectations.

• The Australian dollar kept a bullish bias toward 0.7200, lifted by hawkish Reserve Bank of Australia minutes indicating that interest rate hikes remain on the table.

• The New Zealand dollar leaned higher as persistent domestic inflation fueled expectations for further Reserve Bank of New Zealand rate hikes.

Canadian Dollar Struggles as US-Canada Trade Tensions Rise – August 25, 2026, 8:00 am

• Collapsing US-Canada trade negotiations have pinned down the Canadian dollar, preventing the currency from capitalizing on broader US dollar weakness. Intensified trade frictions have forced foreign exchange traders to demand a higher risk premium on Canada.

• Souring bilateral sentiment threatens Canadian exports and domestic business investment, yet a retreating US dollar acts as a crucial cushion, keeping the Canadian dollar trapped in limbo rather than a full freefall.

• Price action remains headline-driven at the intersection of trade brinkmanship and softer US dollar sentiment, leaving the Canadian dollar highly reactive until negotiations resolve.

Global Pmi

Headline PMIs look strong, but look beneath the surface. 

​Last week’s flash PMI numbers printed impressive headline highs across major economies:

​🇺🇸 US Composite: 56.0 (52-month high), powered by services (56.8) while manufacturing cooled to 53.2.

​🇪🇺 Eurozone Composite: 52.1 (9-month high) with German factory output hitting a 55-month high (even as German services lag at 48.5 and France contracts at 48.8).

​🇯🇵 Japan: 53.4 (6-month high), reporting its strongest new manufacturing orders since 2018.

​🇬🇧 UK: 52.5 (4-month high), though input cost inflation is picking back up.

Forex market brief for 24 August 2026:

The US dollar is softer near the 99 level. Concerns about the fiscal outlook, uncertainty around Fed policy, and plans to double long-end Treasury buybacks to 4 billion dollars per operation are weighing on sentiment.

The euro is firmer after Eurozone manufacturing PMI reached 52.8, although weak German and French services data limit the upside.

Sterling is mixed: UK services remain resilient, but July retail sales fell 0.5% month-on-month.

The Canadian dollar is supported by stronger-than-expected retail sales, which rose 0.6% in June versus 0.4% expected.

The Australian dollar is in focus ahead of Tuesday’s RBA minutes, which may clarify the hike-versus-hold debate. One currency-strength update favours buying AUD and NZD against selected currencies.

Main risk this week: Jackson Hole and any change in Fed-rate