Insights 
VT 
The week starting August 11 is set to begin calmly with no major data releases on Monday that could affect the FX market. However, key announcements on Tuesday include the RBA’s monetary policy in Australia and important labour statistics from the U.K., alongside the U.S. inflation data.
Wednesday will see Australia reporting its wage price index and Canada providing a summary from the Bank of Canada. Thursday will include Australia’s employment data and the U.S. Producer Price Index, among other figures. On Friday, the U.S. will release data on retail sales, consumer sentiment, and inflation expectations.
RBA Policy Anticipation
The RBA is anticipated to lower its cash rate by 25 basis points to 3.60%. Recent trends show a decrease in the inflation rate to 2.1% and slower job growth, with unemployment slightly rising to 4.3%. These indicators, coupled with wage growth, will likely influence future policies.
In the U.K., the average earnings index is expected at 4.7%, with a claimant count change of 20.8K, and an unemployment rate stable at 4.7%. Despite falling payroll employment, the Bank of England reports a steady labour market outlook.
The U.S. projects core CPI to rise by 0.3%, while headline CPI is set at 0.2%. Year-over-year CPI expectations are slightly higher at 2.8%. This data is viewed as essential for assessing potential Fed rate cuts, particularly with ongoing tariff impacts on inflation.
U.S. core CPI rose by 0.3% previously, taking the yearly rate to 3.0%. Concerns remain about tariffs’ effects. Predictions suggest a potential 25 basis points Fed rate cut in September due to labour market signs of weakening.
Australia Employment Projections
For Australia, an employment change of 25.3K is expected, with a slight decrease in unemployment to 4.2%. U.S. core retail sales m/m are forecasted at 0.3%, while total retail sales m/m are expected at 0.5%.
Growth is anticipated to be bolstered by a projected 7% increase in auto sales. Despite optimism, consumer patterns indicate cautious spending, with a decline in discretionary goods and services expenditures.
Looking ahead from today, August 11, 2025, the week is set to be defined by crucial central bank and inflation data. We see a quiet start today, but volatility is expected from tomorrow onwards with major releases from Australia, the U.K., and the U.S. This sets the stage for significant moves in the foreign exchange and interest rate markets.
For Australia, we are anticipating the Reserve Bank of Australia will cut its cash rate to 3.60% on Tuesday. This view is supported by the significant drop in annual inflation to 2.1%, a steep decline from the peaks above 7% we saw back in late 2022. The steady rise in unemployment to 4.3% this year further strengthens the case for the RBA to ease policy.
Given the high probability of a rate cut, we should be prepared for weakness in the Australian dollar. Traders could look at buying put options on the AUD/USD pair to position for a potential fall, especially if the RBA’s statement hints at further cuts. Any surprise hold on rates would likely cause a sharp, albeit possibly temporary, rally in the currency.
In the U.S., Tuesday’s inflation data is the key event that could shape the Federal Reserve’s path toward a rate cut in September. After holding rates steady above 5% for nearly two years, the market is eager for signs of sustained cooling. While headline inflation is expected to be modest, a strong core reading of 0.3% could delay expectations for an imminent cut.
This uncertainty around U.S. inflation suggests an increase in short-term volatility for the U.S. dollar. We could consider using options strategies like straddles on major USD pairs or interest rate futures ahead of the announcement. This would allow us to profit from a large price move in either direction without betting on the outcome of the inflation report.
The focus then shifts to the U.K., where we expect Tuesday’s labor report to show a continued cooling, with wage growth forecast to slow to 4.7%. This would be a significant drop from the levels above 8% seen in 2023, giving the Bank of England more justification to maintain its calm outlook. A weaker labor market is a clear signal that the past rate hikes are working through the economy.
This backdrop is generally bearish for the British pound. If the labor data comes in as expected or weaker, we might see further downside for the currency. We could position for this by considering short positions in GBP/USD or buying put options on the pound.
With both the RBA and Bank of England leaning dovish, opportunities may arise in cross-currency pairs. Should U.S. inflation data come in hotter than expected, a long USD/AUD or long USD/GBP trade could become very attractive. This strategy allows us to capitalize on the diverging monetary policies between the central banks.
Finally, we will be watching U.S. retail sales on Friday to gauge the health of the consumer. While the headline number is expected to be positive, this strength seems to be driven by a temporary rebound in auto sales. Excluding this factor, the underlying data points to a more cautious consumer, which supports the narrative of a slowing economy.
