US Inflation Report and Fed Chair Testimony Could Shake Markets This Week

This week, two major events could cause big swings in the U.S. dollar, stocks, and gold. Here's what beginners need to know.

Event 1: The Inflation Report (CPI)

On Tuesday at 8:30 AM ET, the U.S. releases its CPI report (Consumer Price Index — a measure of how much prices for everyday goods are rising). This is the most-watched number of the week.

• Headline CPI (overall inflation, including food and energy) is expected to rise just 0.1% in June, down from 0.5% in May.
• The yearly rate is expected to slow to 3.8% from 4.2%.
• Core CPI (inflation without food and energy, which are volatile) is expected at 2.8% yearly.

Why does this matter? The Federal Reserve (the U.S. central bank that sets interest rates) wants inflation near 2%. Prices are still rising faster than that.

• If inflation comes in low: The Fed can relax, which usually weakens the dollar but helps stocks and bonds.
• If inflation is high: The Fed may keep rates high (or even raise them), which boosts the dollar but hurts stocks.

Event 2: Fed Chair Warsh Speaks to Congress

Fed Chairman Kevin Warsh will testify before Congress on Tuesday and Wednesday. Lawmakers will ask questions, and his answers could reveal the Fed's next moves.

Warsh has made two things clear:

• He wants to end "forward guidance" (the practice of the Fed telling markets its future plans in advance). Instead, he prefers a "meeting-by-meeting" approach based on fresh data.
• He will not raise the 2% inflation target, and Fed decisions will stay independent of politics.

Other events to watch:

• PPI report (Producer Price Index — measures prices at the wholesale level).
• Bank of Canada decision — expected to keep rates at 2.25%.
• Bank of England Governor Bailey speaks.

Bottom line: These events could set the mood for markets all week. Watch the inflation number first, then listen closely to Warsh's answers.

This is an AI-generated summary. Read the original article at: https://investinglive.com/news/us-cpi-and-fed-chair-warsh-take-center-stage-this-week/