Mohsen Rezaei, secretary of Iran's Supreme National Security Council, said that if the "economic war" by the United States continues, Tehran will completely block oil exports through the Strait of Hormuz and from any points in the Persian Gulf. Iranian authorities also threatened strikes against neighboring oil-producing states, warning that any country joining American economic restrictions against the Islamic Republic would be officially deemed an enemy.

End of the temporary truce

US Treasury Secretary Scott Bessent, in a Financial Times column, announced sanctions aimed at fully isolating Tehran and dismantling its foreign economic ties. Washington intends to punish severely any third countries and commercial entities that continue to do business with Iran. The new wave of escalation coincided with the expiry of a 60-day memorandum on a temporary ceasefire in the Middle East, and Brent futures held around $92 a barrel.

Iran's domestic economy continues to be undermined by inflation above 80% and by a US maritime blockade, which caused Iranian oil exports to plunge by 40% in August (according to Kepler). The final blow to the economy came when the UAE completely severed trade and financial ties with Tehran in response to an Iranian ballistic strike. In doing so, the Islamic Republic lost its main economic partner, which in 2024 accounted for $21.9 billion of imports (75% of all registered Iranian trade) and served as a key financial corridor for evading Western sanctions.

One of the "worst" countries to trade with

Donald Trump announced plans to impose 50% tariffs on imports of Canadian cars, trucks, auto parts and steel from January 1, 2027. On his Truth Social account, he stressed that the duties would not apply if assembly is moved to the United States, calling Ottawa one of the most difficult trading partners. Trump justified the tariffs as protection for the US agricultural sector and as a way to eliminate a $60 billion US trade deficit with Canada, noting that Canadian business is 95% dependent on the US market.

Relations deteriorated after trade consultations collapsed, leading to the imposition of 50% US tariffs on some Canadian imports, including dairy products and alcohol. Washington officials called Ottawa's decision to walk away from a nearly completed deal a foolish strategic mistake. In turn, Canadian Prime Minister Mark Carney said the US had made unfair and economically unviable last-minute changes that undermined trust in the agreement and pledged to impose reciprocal measures.

The Canadian government plans to pause diplomatic contacts with the White House

The Government of Canada intends to pause diplomatic contacts with the White House amid the unfolding trade dispute. Bloomberg sources say Ottawa does not plan to resume talks with the Donald Trump administration until after the US midterm elections. The Canadian side hopes to ride out the current wave of pressure and assess possible changes in the US legislative branch before returning to negotiations on the terms of a new trade agreement.

Who are Treasuries saving?

The yield on 10-year US Treasury notes remains above 4.70%, holding near a 20-month high of 4.75% due to:

• budgetary deficit spending
• large corporate bond issuances by the AI sector

To curb rising rates, the US Treasury decided to use its general account to buy back long-dated securities in addition to yen interventions and an expansion of the Fed's FIMA facility. Tension in the debt market is being amplified by Fed Chair Kevin Warsh's statements about reluctance to raise rates and by rising energy prices amid mutual tanker blockades between the US and Iran.

The US national debt reaching $40 trillion and the persistent large budget deficit are unfolding against a backdrop of sticky inflation and heightened geopolitical risks. The US government is forced to compete for investment capital with major tech corporations borrowing hundreds of billions to build out AI infrastructure. The Treasury's attempt to support the government bond market has so far failed to allay investor concerns and has contributed to a weaker dollar.

Rising government bond yields are being fueled by intense competition for capital from IT giants. Corporate bond issuance to fund AI infrastructure (for example, Alphabet's increase in yields to 6.78%) is putting downward pressure on Treasury prices. The situation is worsened by:

• the geopolitical conflict in the Middle East
• Donald Trump's trade barriers, which add to inflation

Moreover, Scott Bessent's decision to double buybacks of long-dated securities (over $4 billion per auction) has drawn skepticism from analysts at JPMorgan, RSM US and MUFG. They argue that financing long-bond purchases by issuing short-dated debt without cutting budget spending is akin to paying a mortgage with a credit card. Investors interpreted Bessent's moves as a willingness by the White House to sacrifice the dollar's exchange rate to keep interest rates down and support the economy. With uncertainty around the midterms, Citigroup analysts have shifted to a bearish view on the US dollar. Reed Capital experts have urged deep portfolio diversification and a reduced allocation to dollar-denominated assets.

August 25

25 August, 09:00 / Germany / Q2 GDP (final) / prev.: 0.3% / actual: 0.7% / forecast: 0.9% / EUR/USD – up

Germany's GDP in the second quarter rose 0.9% year-on-year, beating initial market estimates and accelerating versus the first quarter. The dynamics point to a gradual exit of the eurozone's largest economy from stagnation and to businesses adapting to current conditions. The next report's forecasts assume the positive growth pace will continue. Confirmation of those expectations would support the euro.

25 August, 10:00 / Germany / Ifo Business Climate (August) / prev.: 85.7 pts / actual: 86.6 pts / forecast: 87.2 pts / EUR/USD – up

Germany's Ifo business climate index rose to 86.6 in July, marking a third month of improvement. Sentiment improved across key sectors:

• manufacturing (?9.6 pts) on recovering demand and easing logistics constraints
• services (-4.4 pts) and trade (-23.4 pts) as corporate pessimism declined
• construction (-20.4 pts) due to fewer complaints about low order books

Analysts expect further strengthening of business sentiment in upcoming releases. Realization of these forecasts would signal a recovery in German business activity and support the euro.

25 August, 15:15 / US / ADP private payrolls (weekly change) / prev.: 8.25k / actual: 9.50k / forecast: – / USDX (6-currency USD index) – volatile

Weekly private-sector employment growth from ADP rose to 9.50k jobs, showing a local rebound after the prior decline and confirming continued moderate hiring activity in the corporate sector. Analysts expect job creation to resume growth in the next release. Confirmation of that outlook would reinforce labor-market stability and support the US dollar.

25 August, 15:30 / Canada / Wholesale sales (July, m/m) / prev.: 0.0% / actual: 2.8% / forecast: ?1.3% / USD/CAD – up

Canadian wholesale sales ex-energy rose 2.8% month-on-month in June, the strongest increase since May 2023. Main drivers included:

• a jump in machinery and equipment sales of 4.8% (including agricultural machinery +25.9%)
• increases in food, beverage and tobacco sales of 2.8%

Analysts expect a strong correction and slower growth in the next report. If realized, that scenario would weigh on the Canadian dollar.

25 August, 16:00 / US / S&P Case?Shiller home price index (June, y/y) / prev.: 1.2% / actual: 1.6% / forecast: 1.7% / USDX (6?currency USD index) – up

The S&P Case-Shiller 20-city annual home price index accelerated to 1.6% in May, the largest gain in nine months. Price leaders included Chicago (+6.9%), New York (+4.2%) and Cleveland (+3.1%), while Las Vegas and Seattle saw declines. Adjusted for inflation, housing costs are still set to fall due to faster consumer price growth. Consensus forecasts for the next period assume further acceleration in house-price dynamics. Confirmation of those expectations would reduce mortgage-sector risks and support the US dollar.

25 August, 16:00 / US / FHFA house price index (June, y/y) / prev.: 2.0% / actual: 2.2% / forecast: 2.2% / USDX (6?currency USD index) – volatile

The FHFA index for single-family house prices rose 2.2% year?on?year in May, recovering versus recent prints. Regional dispersion ranged from -0.3% in the Pacific region to +4.5% in the Middle Atlantic. Experts expect the current pace of house-price growth to continue in upcoming releases. Realization of this would confirm resilient underlying demand and could support the dollar.

25 August, 16:00 / US / S&P Case-Shiller home price index (June, m/m) / prev.: 1.0% / actual: 0.9% / forecast: 0.4% / USDX (6-currency USD index) – down

The S&P Case-Shiller monthly index rose 0.9% in May, reflecting the usual spring pickup in housing activity. Seasonally adjusted, the increase was 0.2%. Forecasts for the next report assume a slowdown in monthly house-price gains. Confirmation of that would indicate a waning of the spring demand peak and could weaken the US dollar.

25 August, 17:00 / US / New-home sales (July) / prev.: 0.618m / actual: 0.628m / forecast: 0.620m / USDX (6-currency USD index) – down

US single-family new-home sales rose 1.6% to an annualized 628k units in June, ending a two-month decline. The pickup was supported by:

• a fall in the median sale price to $398.3k
• incentives, discounts and concessions from builders to support demand
• sales increases in the South (+9.9%), Northeast (+3.6%) and Midwest (+2.5%)

Total housing inventory fell to 485k units (9.3 months' supply), while sales in the West declined 22.4%. Analysts expect a moderate correction and lower new-home sales in the next release. If confirmed, that would signal continued pressure from high rates and weaken the dollar.

25 August, 17:00 / US / Richmond Fed manufacturing index (August, leading) / prev.: 4.0 pts / actual: 5.0 pts / forecast: 7.0 pts / USDX (6-currency USD index) – up

The Richmond Fed's Fifth District manufacturing activity index rose to 5.0 in July, showing a moderate recovery. Improvements were supported by:

• higher shipment volumes and a return to employment growth
• a jump in the local business-conditions index to 10.0
• easing cost pressures as paid and received price growth slowed

New-order inflows decelerated, and long-term company expectations fell slightly. Analysts expect continued positive dynamics in manufacturing in the next report. Confirmation would signal industrial sector strengthening and support the US dollar.

August 26

26 August, 04:00 / Australia / Westpac–Melbourne Institute Leading Economic Index (July, m/m) / prev.: -0.1% / actual: 0.0% / forecast: 0.1% / AUD/USD – up

The Westpac–Melbourne Institute leading economic index for Australia in July held at 0.0%, ending the decline seen in May. Dragging on the indicator were:

• a narrowing in the government bond yield spread
• a drop in the number of building permits issued
• weaker consumer expectations and fewer hours worked

The six-month growth rate of the index remains below trend due to lagged effects from past RBA rate hikes and commodity shocks. Analysts expect the indicator to return to growth in the next release. If realized, that would signal the end of the down phase and support the Australian dollar.

26 August, 04:30 / Australia / Total volume of construction work (Q2) / prev.: 0.2% / actual: 3.4% / forecast: 0.4% / AUD/USD – down

Construction work in Australia rose 3.4% q/q in Q2, the strongest increase in three years. The sector's growth was driven by:

• a 6.9% rise in engineering construction
• a 6.9% expansion in non-residential building
• a strong pickup in activity in Western Australia and Tasmania

At the same time, the residential segment fell 0.6%, and activity declined in several large states. Analysts expect a marked slowdown in construction growth in the next quarterly release. Confirmation would point to a loss of momentum and weigh on the Australian dollar.

26 August, 04:30 / Australia / Consumer Price Index (CPI, July, y/y) / prev.: 4.0% / actual: 3.8% / forecast: 3.2% / AUD/USD – down Australia's annual CPI for June fell to 3.8%, the weakest pace so far this year. Slowing price growth was supported by:

• easing goods inflation and lower transport costs due to cheaper fuel
• slower increases in medical services, clothing and footwear
• an unexpected decline in the headline monthly CPI

Housing costs accelerated and services inflation ticked up slightly. Consensus forecasts expect further deceleration in inflation. Confirmation would reduce upside inflationary risks for the RBA and exert downward pressure on the Australian dollar.

26 August, 13:00 / United Kingdom / CBI Retail Sales Balance (August, leading) / prev.: -54 pts / actual: -26 pts / forecast: -24 pts / GBP/USD – up

The CBI retail sales balance for July improved to -26 points, the smallest drop in retail sales seen over the past six months. The sector was supported by:

• a slowdown in the rate of sales decline toward seasonal norms
• a recovery in wholesalers' sales volumes to near-stable levels

Retailers still face weak consumer confidence and rising labor costs. Analysts expect further easing of negative retail dynamics in August. If confirmed, this would bolster hopes for a consumer recovery and support the pound.

26 August, 15:30 / US / GDP (Q2, annualized) / prev.: 0.5% / actual: 2.1% / forecast: 1.5% / USDX (6-currency USD index) – down

US GDP growth slowed to 1.5% y/y in Q2 versus 2.1% in Q1. Headwinds included:

• a negative contribution from net trade (-1.01 p.p.) as export growth slowed to 4.5%
• a 0.8% cut in government spending following SPR oil sales
• a 5.0% decline in commercial real estate investment and slower inventory accumulation

Consumer spending accelerated to 3.2%, and residential investment rose 1.5% for the first time in six quarters. Analysts' next releases assume continued muted growth. Confirmation would signal a cooling business cycle and weigh on the US dollar.

26 August, 15:30 / US / Personal Income (July, m/m) / prev.: 0.7% / actual: 0.2% / forecast: 0.3% / USDX – up

US personal income growth slowed to 0.2% m/m in June. Drivers included:

• a $19.6bn rise in private-sector wages
• higher asset income from dividends and interest receipts
• expanded social benefit payments via Medicare and social security

Farm incomes fell due to the timing of support payments. Analysts expect income growth to pick up again in July. Confirmation would support household purchasing power and the US dollar.

26 August, 15:30 / US / Personal Spending (July, m/m) / prev.: 0.9% / actual: 0.3% / forecast: 0.2% / USDX – down

US personal spending rose 0.3% m/m in June, slowing after May's surge. Spending composition changes included:

• a sharp fall in gasoline and energy outlays (-$48.1bn) as oil prices eased
• higher vehicle and parts purchases (+$17.4bn)
• increased spending on healthcare (+$22.8bn) and financial services (+$14.0bn)

Real consumer spending (adjusted for inflation) rose 0.4%. Consensus expects further slowing in spending growth. Confirmation would signal a weakening consumer boom and weigh on the dollar.

26 August, 15:30 / US / GDP Deflator (Q2) / prev.: 0.5% / actual: 2.1% / forecast: 3.6% / USDX – down

The implicit GDP price deflator accelerated sharply to 6.3% y/y in Q2, reflecting persistent inflationary pressure and rising prices for final goods and services. Subsequent reports are expected to show a moderation from these peak levels. Confirmation would reduce overheating risks and weigh on the US dollar.

26 August, 15:30 / US / Durable Goods Orders (July, m/m) / prev.: -4.0% / actual: 0.3% / forecast: 0.7% / USDX – up

New orders for durable goods rose 0.3% in June to $334.77bn, rebounding after a 4.0% decline in May. The recovery was supported by:

• a 1.1% rise in capital goods orders and a 1.1% gain in primary metals
• a 3.1% increase in computers & electronics and 0.9% in electrical equipment
• steady corporate investment in AI and defense procurement

Transport equipment orders fell 0.2% due to weakness in autos (-0.6%), while core non-defense capital goods ex-aircraft rose 0.9%. Analysts expect acceleration in the sector. Confirmation would ease concerns about business investment and support the dollar.

26 August, 15:30 / US / PCE Price Index (July, y/y) / prev.: 3.8% / actual: 4.1% / forecast: 3.7% / USDX – down

The annual PCE price index for June fell to 3.7%, down from May's 4.1%. The series reflects a continued gradual disinflation following earlier inflation peaks. Economists expect the downward trend in price pressures to persist. Confirmation would lower the Fed's tightening probability and weaken the dollar.

26 August, 15:30 / US / Final Sales to Domestic Purchasers (Q2, annualized) / prev.: 0.3% / actual: 1.9% / forecast: 2.2% / USDX – up

Final domestic sales rose 2.2% annualized in Q2, up from 1.9% previously, reflecting sustained demand for finished goods. Analysts' consensus expects continued positive sales dynamics. Confirmation would indicate resilience in the domestic market and support the dollar.

26 August, 17:30 / US / EIA Crude Oil Inventories (weekly) / prev.: 17.422 mln bbl / actual: 4.405 mln bbl / forecast: 1.9 mln bbl / Brent – up

US commercial crude stocks rose by 4.405 mln barrels to 428.8 mln barrels, marking a third consecutive week of builds. Factors included:

• a 216k b/d rise in refinery runs
• gasoline inventories up 0.688 mln bbl while distillates fell 1.530 mln bbl
• a 1.754 mln b/d drop in net crude imports

Cushing inventories fell by 1.314 mln bbl. Analysts expect commercial stocks to resume declines in the next report. Confirmation would ease concerns of oversupply and push Brent prices higher.

Other events and speeches: 25 August, 04:30 / Australia / RBA meeting minutes (11 August) / AUD/USD 25 August, 07:00 / Australia / Speech by David Jacobs (Reserve Bank of Australia) / AUD/USD 25 August, 15:00 & 23:00 / US / Speeches by Thomas Barkin (President, Richmond Fed) / USDX 26–28 August / US / Jackson Hole Symposium / USDX 26 August, 13:10 / Eurozone / Speech by Piero Cipollone (Executive Board, ECB) / EUR/USD 26 August, 18:45 / US / Speech by Thomas Barkin (Richmond Fed) / USDX

Speeches by senior central bank officials are also scheduled across these days. Their comments typically trigger FX volatility as they may signal future rate policy intentions.