A Quiescent August Thus Far
August 11, 2026
Because so many market participants take holidays at this time of year, August has a reputation in the financial community for being a calm period when not much happens, and the first half of this year’s August has pretty much conformed to that stereotype. It hasn’t always been so, however. It was in August that the world stumbled into both world wars last century. Nixon’s resignation in 1974 and Iraq’s 1990 invasion of Kuwait both occurred in August. The beginning of the end of the fixed dollar rate international monetary system began in mid-August 1971 when President Nixon ended direct convertibility of dollars into gold that temporarily unlocked fixed dollar parities. The soaring dollar between 1980 and early 1985 was interrupted three times by three brief but significant downward corrections, the first of which commenced on August 10, 1981, and the selling pressure against sterling that ultimately knocked sterling out of the European Monetary System in September 1992 began the month before.
The dollar‘s value against most other currencies overnight remained hardly changed. Stability also characterized most stock markets and ten-year sovereign debt yields. West Texas intermediate crude oil remains above $80/barrel at $82.25 but is little changed from Monday’s closing level. More movement has been experienced in gold (+0.7%) and the price Bitcoin (+0.6%). Japanese markets were shut for the Mountain Day holiday.
The few developments of note on the news wire involve Australia’s interest rate decision, Colombia’s earthquake, and a hardening of the conditions for Middle Eastern peace from all sides. In a tit for tat response to Iran’s list of demand before entering talks with the United States, President Trump lengthened his list of demand, and Prime Minister Netanyahu clarified that Israel isn’t leaving Gaza or Lebanon regardless of what Iran and the U.S. agree unless Hamas disarms fully. Following Venezuela, Colombia became the second South American country to suffer a massive earthquake after politically succumbing to President Trump’s wishes. Colombia’s 132 death toll is sure to rise further in coming days, while over 6300 deaths are now confirmed from Venezuela’s quakes.
The Reserve Bank of Australia’s decision not to lift its 4.25% Official Cash Rate further had been the view of market pundits and was voted unanimously. However, the released statement and Governor Bullock’s press conference leave the door open to more restraint if deemed necessary. Consumer price inflation of 3.8% in June was still above its 2-3% target and not projected to settle at the range’s midpoint for somewhat longer than a year from now. A vote not to hike that rate now was justified by tighter current monetary conditions as a result of a trio of 25-basis point increases implemented this year in February, March and most recently May. Officials feel that the economy is slowing but also observe that expectations of inflation in the short term remain too elevated.
The Board remains focused on ensuring that high inflation does not become embedded. To achieve this, growth in aggregate demand needs to remain subdued to reduce capacity pressures and bring inflation back to target. With monetary policy judged to be somewhat restrictive, the Board decided to leave the cash rate target unchanged while it assesses how the economy is evolving. The Board will continue to do what it considers necessary to bring inflation sustainably back to target, including increasing the cash rate target further if upside risks materialize.
U.S. small business sentiment printed at an 11 month high in July of 99.8 after 97.4 in June and a 17-month low of 95.3 in May.
Ireland’s construction purchasing managers index rebounded briskly to a 4-month high of 53.0 last month from 45.3 in June.
Lithuanian consumer price inflation accelerated to a 35-month high of 5.9% in July versus a 17-month low of 3.1% six months earlier. Producer price inflation in that economy accelerated about two percentage points to a 2-month high of 11.3%.
Dutch consumer prices leaped 1.6% on month in July and were 3.2% higher than a year earlier.
Czech CPI inflation of 1.7% last month was at a 2-month high, while Latvian CPI inflation of 2.6% constituted a 5-month low.
Upwardly revised quarter-on-quarter GDP growth in Singapore of 1.4% in April-June was associated with a 5.9% increase from 2Q 2025.
In June, Indonesian retail sales posted their third straight year-on-year decline of at least 3.0% versus positive on-year growth of a tad more than 5.0% in the first quarter.
Factory output in South Africa (-1.7%) recorded a year-on-year decline in June for the seventh time in eight months. South Africa’s unemployment rate last quarter of 33.6% was not very different from 33.2% a year earlier.
U.S. existing home sales get reported a little later this morning, but investor attention is most focused on U.S. CPI and PPI figures that will be released tomorrow and Thursday, respectively.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Reserve Bank of Australia, U.S. small business sentiment
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