EUROPEAN SESSION
In the European session, we don’t have much on the agenda other than the final Spanish CPI report. The market focuses more on preliminary data, so the final readings are almost never a market-moving release. Moreover, the data won’t change anything for the ECB, so the market reaction will be muted.
The price action might remain mostly rangebound ahead of the US CPI report, as surprises in the data could trigger big moves in the markets.
AMERICAN SESSION
In the American session, all eyes will be on the US CPI report. Headline CPI Y/Y is expected at 3.6% vs 3.4% prior, while the M/M measure is seen at 0.6% vs 0.4% prior. The Core CPI Y/Y is expected at 2.5% vs 2.4% prior, while the M/M measure is seen at 0.2% vs 0.3% prior.
The data must be seen in the context of persistent inflationary pressures stemming from the US-Iran war. The focus will be on the core inflation data, especially the M/M measure as that’s what the Fed has been focusing on.
Lower than expected data could trigger a relief rally in risk assets in the short-term on a slightly dovish repricing, but it won’t change the persistent pressures from the Middle East crisis. A hot report, on the other hand, could lead traders to expect the Fed to act faster and raise the probabilities for an October hike, which would weigh on risk sentiment. Given the Fed’s pushback against a rate hike in October though, we might need the Core CPI M/M to come in at 0.4% to force the Fed to act sooner.
CENTRAL BANK SPEAKERS
- 08:30 GMT/04:30 ET – ECB President Lagarde (neutral – voter)
- 08:30 GMT/04:30 ET – ECB’s Pereira (neutral – voter)
- 09:20 GMT/05:20 ET – ECB’s Escriva (neutral – voter)
- 09:40 GMT/05:40 ET – Fed’s Bowman (dovish – voter)
- 16:15 GMT/12:15 ET – ECB’s Schnabel (hawkish – voter)
- 17:30 GMT/13:30 ET – Fed’s Barkin (neutral – non voter)
This article was written by Giuseppe Dellamotta at investinglive.com.
