U.S. consumption worsens. September Fed rate hike expectations push further back
The highlight material for August 15, 2026 is,America's consumer weakness.
The July U.S. retail sales reported on August 14 show a month-over-month decline of 0.6%. It is the first drop in nine months.
Moreover, core retail sales used for GDP calculation also fell by 0.4%. The August U.S. consumer sentiment index also dropped to 51.0, below market expectations of 54.5.
This week, inflation has also been seen to ease in the CPI and PPI.
In other words,
Prices are stabilizing
＋ consumption is weakening
↓
The Fed will no longer urgently need to hike rates
as a result.
Therefore, the market is discounting further anticipated Fed rate hikes for September.
From a perspective of FX and gold,
U.S. economy slowdown
→ Diminished expectations for Fed rate hikes
→ U.S. yields and the dollar tend to fall
→ Gold tends to gain
This is the trend we want to be aware of.
However, there are cautions as well.
Tensions continue in the Strait of Hormuz, and crude oil prices are rising. If oil prices surge further, inflation could be pushed up again.
Today's takeaway is
to keep the base scenario of “weak dollar and strong gold” in mind, while remaining vigilant for sharp moves in crude prices.
In early-week trading, we will closely monitor U.S. interest rates, the dollar, and gold movements.
The July U.S. retail sales reported on August 14 show a month-over-month decline of 0.6%. It is the first drop in nine months.
Moreover, core retail sales used for GDP calculation also fell by 0.4%. The August U.S. consumer sentiment index also dropped to 51.0, below market expectations of 54.5.
This week, inflation has also been seen to ease in the CPI and PPI.
In other words,
Prices are stabilizing
＋ consumption is weakening
↓
The Fed will no longer urgently need to hike rates
as a result.
Therefore, the market is discounting further anticipated Fed rate hikes for September.
From a perspective of FX and gold,
U.S. economy slowdown
→ Diminished expectations for Fed rate hikes
→ U.S. yields and the dollar tend to fall
→ Gold tends to gain
This is the trend we want to be aware of.
However, there are cautions as well.
Tensions continue in the Strait of Hormuz, and crude oil prices are rising. If oil prices surge further, inflation could be pushed up again.
Today's takeaway is
to keep the base scenario of “weak dollar and strong gold” in mind, while remaining vigilant for sharp moves in crude prices.
In early-week trading, we will closely monitor U.S. interest rates, the dollar, and gold movements.