Eurozone inflation set to rip higher

It is shaping up to be a rather defensive and risk averse session in Europe, with equity futures set for a poor start while Treasury yields are also staying in retreat for now.

The dollar and yen are among the more straightforward beneficiaries if risk sentiment sticks with the mood from yesterday, even if the former did see gains from earlier in the week trimmed slightly amid month-end and quarter-end trading.

EUR/USD lingering at the lows from July last year below 1.1600 is still providing some tailwind for the dollar, even as USD/JPY is seen rejected at 112.00 for the time being.

Elsewhere, while commodity currencies did advance against the greenback in trading yesterday, the technicals aren't offering too much significance still.

AUD/USD gains are kept in-check by its key hourly moving averages @ 0.7238-50 while USD/CAD is paring back some of its downside move from yesterday and keeping back above its own key hourly moving averages @ 1.2682-07 at the moment.

There will be some releases to move things along in Europe but expect risk sentiment to likely dominate proceedings ahead of the weekend.

0600 GMT - Germany August retail sales

Prior release can be found here. After a more volatile last few months, German retail sales is expected to improve slightly in August, reflecting some stability in consumption activity. Gauging conditions in autumn will be of more interest to the market though.

0715 GMT - Spain September manufacturing PMI

0730 GMT - Switzerland September manufacturing PMI

0745 GMT - Italy September manufacturing PMI

0750 GMT - France September final manufacturing PMI

0755 GMT - Germany September final manufacturing PMI

0800 GMT - Eurozone September final manufacturing PMI

Supply chain disruptions and capacity constraints are weighing on Europe's manufacturing sector and the reports here should reaffirm that, with focus on the final readings for France, Germany, and overall Eurozone.

0830 GMT - UK September final manufacturing PMI

The preliminary report can be found here. Supply bottlenecks is the key worry and that has put a significant drag in manufacturing activity in the UK, which should be reaffirmed by the final report later today.

0900 GMT - Eurozone September preliminary CPI figures

Prior release can be found here. Inflation is expected to push higher still, rising from the 10-year high in August, as price pressures in the euro area continue to mount. This will put further pressure on the ECB in trying to maintain its 'transitory' narrative, especially since the trend is likely to persist further through to year-end.

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.