Today's key event is undoubtedly the US CPI inflation release at 1:30 PM BST, which could determine the size of the Fed's rate cut. The market is 100% certain that a Fed cut will happen next week, but its scale is now under debate. If CPI surprises on the downside, similar to the recent PPI reading, the odds of a 50 basis point cut will increase significantly. While the current risk from the labor market all but guarantees a cut, inflation concerns had previously moderated expectations. If the issue of excessive inflation subsides, it would pave the way for the Fed to make up for lost time.
Earlier today, Japan's PPI inflation data was released, which broadly met expectations. It is also important to remember that the ECB decision is due today. However, it is not expected to bring any surprises, with rates likely to be held at the same level as in July. The key will be President Lagarde's communication during her press conference.
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Calendar:
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12:00 PM Turkey - Interest Rate Decision (Forecast: 41%; Previous: 43%)
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1:15 PM EMU - Deposit Facility Rate (Forecast: 2.0%; Previous: 2.0%)
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1:30 PM US - August CPI Inflation (Forecast: 2.9% y/y; Previous: 2.7% y/y)
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1:30 PM US - August Monthly CPI Inflation (Forecast: 0.3% m/m; Previous: 0.2% m/m)
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1:30 PM US - August Core CPI Inflation (Forecast: 3.1% y/y; Previous: 3.1% y/y)
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1:30 PM US - August Monthly Core CPI Inflation (Forecast: 0.3% m/m; Previous: 0.3% m/m)
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1:30 PM US - Initial Jobless Claims (Forecast: 234k; Previous: 237k)
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1:45 PM EMU - ECB Press Conference
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3:30 PM US - Natural Gas Storage Change (Forecast: 69 bcf; Previous: 55 bcf)