Markets face several important tests this week as investors assess the outlook for US interest rates, UK inflation and consumer demand.
The Federal Reserve minutes on Wednesday 19 August are likely to attract the most attention. Markets will be looking for signs of how policymakers are thinking about interest rates and whether higher rates remain a realistic option. The Fed has reduced its reliance on clear forward guidance, so the wording of the minutes could have a direct impact on rate expectations and the US dollar.
USD/JPY is one market to watch. The pair has recovered following intervention by the US and Japan and has moved above its 10-day exponential moving average. Higher longer-term interest rates have also supported the dollar. A move above ¥160.50 would strengthen the current technical picture, while a softer interpretation of the Fed minutes could weaken that momentum.
Walmart reports fiscal second-quarter 2027 results on Thursday 20 August. Earnings are expected to reach $0.74 per share, up 9.1% from a year earlier, while revenue is forecast to rise 5.3% to $186.9 billion.
The market will also focus on Walmart’s outlook. Third-quarter expectations currently point to earnings of $0.68 per share, up 9.8%, and revenue of $188.3 billion, representing growth of 5%.
The results will provide a direct test of whether Walmart can continue growing sales and earnings as consumer conditions evolve. Options positioning is broadly neutral ahead of the announcement, suggesting limited directional bias before the numbers are released.
Resistance sits near $115, with a further area around $120. A sustained move above $115 could open the way towards $125, while the gap near $130 remains another potential target. On the downside, $105 is an important support level. A break below it could bring the $100 area back into focus.
UK inflation data, also due on Wednesday, could influence expectations for the Bank of England and sterling. Headline consumer price inflation is expected to rise 0.4% month on month in July, compared with 0.1% in June. The annual inflation rate is forecast to increase to 2.9% from 2.6%. Core inflation is expected to ease slightly to 2.5% from 2.6%.
The next Bank of England meeting is scheduled for 17 September, and no immediate change in interest rates is currently expected. That means the inflation data would probably need to differ clearly from forecasts to shift the policy outlook. A stronger reading could support sterling. A weaker or in-line result could leave GBP/USD under pressure.
GBP/USD has struggled near $1.355. A break above that level could bring $1.36 into view. If the pair falls below its 10-day exponential moving average and support near $1.344, the risk of a move towards $1.32 would increase.
CMC Markets plc (LON:CMCX) is a UK-based financial services company that offers online trading in shares, spread betting, contracts for difference and foreign exchange across world markets.
