For those eager to gain insight into the recent level of inflation and retail store spending in the United States, several government reports coming this week are just the thing. For those eager… who are we kidding? We're all eager to know. As usual, even before the reports have been published, Wall Street is already abuzz. Let’s find out what it’s all about.

The first full week of September saw three major US stock indices closing in the red. Dow Jones lost 0.6%, while the other two major benchmarks slipped 1.19% (S&P 500) and 1.8% (Nasdaq Composite), respectively.

However, this upcoming week promises to be eventful, with several government reports on the horizon. Wall Street is starting the week on a positive note ahead of new inflation data. The futures for the S&P 500 rose 0.5%, while the Dow Jones Industrial Average gained 0.2%.

DJI / SPX / IXIC Chart by TradingView

The report will shed light on where prices are heading and how it's affecting the economy. Analysts anticipate that prices may have risen to 3.6%, up from 3.2% in July. Although inflation has been gradually cooling since its peak of over 9% last summer, there is concern that achieving the Federal Reserve's 2% inflation target may prove to be challenging.

A recent increase in oil prices has added to concerns that inflation may not be receding as much as hoped in the United States. That could lead the Federal Reserve to maintain higher interest rates for an extended period. While high-interest rates are intended to slow down the economy and impact the job market, ultimately helping to curb inflation, they could also harm stock prices and other investments, except for Forex.

It’s no secret that higher interest rates boost a currency's value as they attract more foreign investment, resulting in more money flowing into the country and higher demand for the currency. Though interest rates at their highest levels in more than two decades may not have effectively addressed rapid inflation, the US dollar currency index achieved an eighth consecutive week of gains, surpassing the 105.00 mark. The index, measuring the dollar’s value against six other currencies, has surged by a substantial 5% in the past two months. The US dollar has caused declines in the value of each of its major competing currencies over the last quarter.

Opinions regarding the Fed’s next move are split. On one hand, it's expected that the US inflation data will show a slight increase in price pressures. This could be a strong signal that the Fed might decide to raise rates, which would only further strengthen the dollar. However, on the other hand, the labor market continues to deteriorate, accompanied by a rise in corporate bankruptcies, which could lead to interest rate cuts. We'll have to wait and see.