This week will revolve around two major events: Tuesday’s US inflation report and Friday’s meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska. Consensus is expecting another acceleration in core CPI, to 0.3% month-on-month (3.0% year-on-year), in this week’s July print. That is a number that can probably be seen as acceptable for the Federal Reserve to proceed with a September cut (90% priced in), given the backdrop of a significantly weaker jobs market. We forecast a 0.4% MoM core print, which would place greater emphasis on subsequent data and may limit further dovish repricing in the near term, though should not materially reverse September cut bets. From an FX perspective, we expect Tuesday’s print to give the US Dollar (USD) some short-lived support, which should wane once other data confirm jobs and activity slack, ING's FX analyst Francesco Pesole notes.

Any agreement reached on Friday might only be preliminary at best

"On the US-Russia summit, the consensus of political analysts and most media reports suggests that Putin is willing to agree to a ceasefire only with substantial territorial concessions from Ukraine. Trump’s main leverage appears to be the threat of sanctions and protectionist pressure on Russia’s trading partners, such as India. The extent to which Russia’s economic slowdown might compel concessions, or how far Trump is willing to push for a favourable territorial settlement, remains uncertain. The absence of Ukraine and European representatives at the summit suggests any agreement reached on Friday should only be preliminary at best."

"Crude oil prices serve as a useful barometer; they have declined 8% since early August, reflecting tentative optimism regarding a truce. Ukraine’s 10-year bonds have rallied 2% over the same period. Should a ceasefire materialise in the coming weeks, the euro is likely to perform well, primarily against the dollar, yen, and Swiss franc. However, given the significant reduction in developed currency markets’ sensitivity to energy prices and the Ukraine conflict since 2022–2023, we are not looking at it as a seismic event for FX."

"US data and Fed-related developments should remain the dollar’s primary drivers. Alongside the CPI report, key releases this week include the NFIB survey (Tuesday), PPI data (Thursday), and retail sales (Friday). Fedspeak will also be critical as markets digest the implications of the substantial July jobs market revisions. An empty calendar and the proximity to tomorrow’s CPI may keep FX markets in a quiet, wait-and-see approach for today."