Dollar Sell-Off Continues Amid CPI Hopes

The US Dollar sell-off that followed July's payrolls collapse has continued into August, but investors are now looking to Wednesday's Consumer Price Index (CPI) report for direction. The CPI is projected at 3.4% year-over-year (YoY) headline and 2.5% YoY on the core measure, which will determine whether the repricing of a hawkish Federal Reserve extends or stalls.

The US Dollar Index (DXY) fell below 100.00 after sinking through Friday's session, while major currencies have seen varying degrees of strength against the dollar. The EUR/USD pair has ended the week above 1.1550, near two-month peaks, but remains a dollar story due to the European Central Bank's content to wait.

The UK finally has something of its own to trade on this week, with second-quarter GDP scheduled for Thursday, forecast to slow to 0.4% from 0.6%. A soft set of numbers would complicate the Bank of England's position and give Cable its first domestic drag in weeks.