July retail sales came in softer than hoped, easing to 0.5% from 0.9% (consensus 0.6%). The data point to wavering consumer confidence, a headwind for growth. At the same time, July producer prices surprised to the upside: headline PPI rose to 3.3% year-over-year from 2.4% (vs. 2.5% expected), while core PPI climbed to 3.7% from 2.6%. The upside surprise underscores policymakers’ concern that elevated import tariffs are feeding through to prices.

Given this backdrop, the Federal Reserve may hold off on near-term policy changes. That’s echoed in the tone shift from officials: where signals had leaned dovish, they’re now more wait-and-see. Richmond Fed President Thomas Barkin and St. Louis Fed President Alberto Musalem both said it’s too early to judge whether rising consumer prices or a cooling labor market is the greater risk, arguing for more data before acting.

Eurozone

The euro is firming versus the dollar and pound, but weakening against the yen.

All eyes are on Wednesday’s 11:00 (GMT+2) release of euro-area inflation. Economists expect headline CPI to hold at 2.0% year-over-year—right on the ECB’s target—and core at 2.3%. A print in line with forecasts would suggest stable price pressures and justify a steady policy stance until the growth hit from U.S. tariffs becomes clearer—likely toward year-end. A Reuters poll shows most economists expect the ECB to keep rates unchanged until December, with easing possible thereafter.

United Kingdom

Sterling is gaining on the dollar but losing ground to the euro and yen.

On Wednesday at 08:00 (GMT+2), the UK CPI is expected to accelerate to 4.0% year-over-year from 3.6%, with core up to 3.8% from 3.7%—evidence of lingering inflation. That backdrop argues for a pause from the Bank of England after August’s cut from 4.25% to 4.00%, a move passed by just one vote, highlighting deep divisions on the Committee and fragile support for the dovish camp.

Japan

The yen is strengthening against the euro, pound, and dollar.

Preliminary Q2 GDP topped expectations, rising 0.3% q/q (vs. 0.1% forecast) and 1.3% y/y (vs. 0.5%), helped by exports that stayed resilient despite U.S. tariff pressure. Private consumption—over half of output—rose 0.2% (vs. 0.1% expected), capex increased 1.3%, and June industrial production rebounded to 2.1% from -0.1%. With inflation still running above the 2.0% target, the Bank of Japan has room to continue gradual tightening.

Australia

The Australian dollar is weaker versus the euro and yen, but firmer against the pound and U.S. dollar.

July labor data were mixed but decent: unemployment dipped to 4.2% from 4.3% (in line with forecasts), employment rose 24.5k (just shy of 25.3k expected), and full-time jobs swung from -36.7k to +60.5k. Many analysts see the improvement as temporary, expecting joblessness to drift back to 4.3% and hover there for years. The RBA is still seen cutting at least once more before year-end, likely in November.

Oil

Crude is edging lower after weak July data from China: industrial production slowed to 5.7% from 6.8% (an eight-month low) and retail sales fell to 3.7% versus 4.6% expected—signs of cooling demand in the world’s leading oil importer and a risk to global consumption.

Markets are also watching today’s meeting between U.S. President Donald Trump and Russia’s Vladimir Putin. A breakthrough on the Russia-Ukraine conflict could see some sanctions on Russian hydrocarbon exports lifted, boosting supply and pressuring prices. Failing that, the White House may pursue additional tariffs on buyers of Russian energy, which would lend support to crude.