Global Markets Face Crucial Tests Amid Inflation, Oil, and AI Volatility

The global market is bracing for a pivotal week as investors digest crucial economic data and geopolitical developments. The key events include US inflation and retail-sales data, China's weakening demand, the outlook for the Japanese yen following coordinated US-Japan intervention, developments around the Strait of Hormuz, and earnings from companies tied to technology and artificial intelligence.

The spotlight will be on US consumer-price data on Wednesday, August 12, providing the first major inflation test since the disappointing jobs report. The Consumer Price Index (CPI) for July is due Wednesday, followed by Producer Price Index (PPI) data on Thursday and retail sales on Friday. Markets expect annual headline inflation to accelerate to around 3.4% in July, while core inflation is forecast at approximately 2.5%, according to estimates cited by Reuters.

The figures will help determine whether weakness in the labor market is becoming significant enough to encourage the Federal Reserve to adopt a more accommodative stance, or whether persistent price pressures will force policymakers to remain cautious.