UK inflation data on the agenda today
The dollar is holding its ground for the most part as US inflation data yesterday, while missing on estimates, still somewhat reaffirms the Fed's present taper timeline.
Policymakers will be hoping for a sweet spot in inflation and labour market data, one which reaffirms the need to begin tapering by year-end but one that is still 'transitory' with regards to the former so as to not compel them to raise rates as soon as next year.
While that is playing out, the market also has plenty of other issues to wrap its head around at the moment. I would argue that the biggest is the mounting worries coming out of China with contagion risks still elevated amid the Evergrande situation, adding to slowing recovery conditions and a broad crackdown of multiple industries simultaneously.
The fear for risk trades is not helped by calls for a sharp correction amid the frothy levels we are seeing in US stocks, despite some moderation last week.
The quadruple witching period at the end of this week isn't going to help with easing volatility and providing much clarity but for now, the market sure seems to have a lot on its plate before getting to the FOMC meeting next week.
0600 GMT - UK August CPI figures
Prior release can be found here. UK consumer inflation is estimated to shoot up in August and that should keep the pressure on the BOE to normalise/tighten policy sooner rather than later, providing some tailwind for the pound perhaps. Annual headline inflation is expected to jump to +2.9% y/y - the highest since January 2018. But keep in mind the impact of base effects with the UK having seen the "eat out to help out" scheme introduced in the summer last year to try and spur consumption activity, which had a downwards pressure on prices.
0645 GMT - France August final CPI figures
The preliminary report can be found here. The final report should just reaffirm stronger price pressures in France last month, fitting with the trend across the region.
0900 GMT - Eurozone July industrial production data
Prior release can be found here. Factory output is expected to improve slightly after the drop in the last few months but supply chain disruptions are likely to keep some pressure on overall production at the end of Q3 and in Q4.
1100 GMT - US MBA mortgage applications w.e. 10 September
Weekly US housing data, measures the change in number of applications for mortgages backed by the MBA during the week.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
